Botswana Power Corporation (BPC) has finally stopped playing to the gallery and conceded that the most expensive project ever undertaken in Botswana spurning to 11 billion being Morupule B “is suffering from construction defects which need to be addressed.”
The pronouncement comes at a time Minister of Minerals, Energy and Water Resources (MMEWR) Kitso Mokaila’ s gone-wax-lyrical on the matter. The Minister had several times spoke in carefully loaded terms about the misgivings that engulfed the power plant and his timing and deadline missed the boat more than twice.
It is understood that a Gap Analysis Review of the multi-billion pula power station was carried out and completed in December 2014 to determine measures to address the construction defects which have rendered the plant unreliable.
The defects remediation status illustrates that the major issues to be addressed at the 600 MW expansion of BPC’s then sole existing power station of Morupule A – were identified in the “boilers” and solutions to address these issues are now on the offing.
To get their ducks in a row, BPC officials say the defects will be remedied by qualified contractors and with good quality material and equipment from reputable suppliers. “The implementation of remedial measures is estimated to take up to 3 Years,” Nchena Z. Mothebe, the BPC Director Transmission has said this week in Gaborone. BPC through a 4th annual key customer seminar initiated to interact with and engage its business clientele, says they have kept their fingers on the pulse and are working on the implementation of the measures to improve plant reliability and provide full output of the plant.
According to the Director in the Transmission department, 2 of 4 units are currently in operation at Morupule B. Unit 1 and 3 are currently in operation while unit 2 is expected to be back in service by mid-December. Unit 4 is on statutory outage till mid-January 2016, he assured the gathering which was comprised of various business kingpins including Manager of Phakalane suburban area Lesang Magang who expressed reservations about power outages and late bills as well as how they literally do no function in the absence of power transmission especially to their heartbeat business of the Phakalane Golf Estate.
In addition more investors at the gathering, who thronged the meeting in decent numbers and seemingly looked stressed out as the discussions pondered on, have narrated different stories of how their profits has hit an all-time-low due to inconsistent and unannounced power cuts.
This is also believed to hamper the roll-out of the newly much talked about Economic Stimulus Package (ESP) – a government initiative aimed at motivating the economy for more growth. Reliable power supply was seen as an enabler to implementation of ESP and failing which will be dire domino-effect.
Morupule B was well-thought-out as an upshot of the country’s worryingly reliance on importing approximately 80% of its power from neighbouring South Africa’s power giant Eskom which was reduced in subsequent recent years due to power crisis at the country as well.
It was said that the contract between Eskom and BPC involving the 300mw (when available) “will be extended from January 2016 to December 2018.” In addition the country also extracts between 20 to 100mw from Mozambique in which 20mw is available during peak hours.
However the BPC hands-on official stated that the regional power supply deficit will make “firm regional agreements difficult.” Weekend Post understands that due to mismanagement by the plant contractor China National Electric Equipment Corporation (CNEEC) which wielded deferrals of the project spiraling beyond the targeted 2012 and use of substandard material – the initially engaged CNEEC later fell out with government.
Consequently a German company, STEAG Energy Services was awarded by MMEWR Minister Mokaila (and government) to take over the project which entailed the maintenance and operation services at the Power Station. Meanwhile this publication has learnt that nonetheless the defects still persists.
With regard to Morupule A refurbishment project, the corporation has also updated on Wednesday that they have identified a contractor to carry out major overhauls of Units 1, 2 and 4 and refurbishment of Unit 3.
“Upfront project preparatory works were commenced in October 2015 while BPC is negotiating a contract for refurbishing Morupule A with the preferred bidder,” they stated.
The Morupule A project signposts that there will be sections 1 to 4 and each will churn out 30MW which will be commercially operational by October 2016. Only section 4 will trail in the succeeding year in October 2017. All the sections in Morupule A are projected to reach a total capacity of 120MW.
Morupule A was mothballed in October 2012, and so far the transactional advisors have been appointed, and limited notice to proceed signed with EPC contractor.
More projects to curb power crisis
In addition the beleaguered corporation’s renewal energy projects comprise solar thermal which has a capacity of 100MW and are targeted to be operationalized by 2017/18. Expressions of
Interests for the project are being evaluated after 118 bids were received following the closing date on August 2015.
According to BPC executives, another project involving renewable energy is awaiting cabinet approval for a go-ahead and it involves 75mw.
Other projects on the pipeline include IPP Brown Field which is directed for conclusion in 2018/19 and predicted to supply 300mw, as well as a project of IPP Green field involving 300mw and to be finalised in 2020/21.
Fresh information suggests that the Public Procurement and Asset Disposal Board (PPADB) has given nod to government request to award Owners Engineer contract for greenfield energy project as BPC moves to plug the energy gap. The Owner Engineer will overlook the addition of 2 more units at Morupule namely 5 and 6. The complex currently has 6 units after the addition of 4 units at Morupule B which is struggling to work at full capacity.
BPC warns power supply still on the red light
BPC has emphasized that the power supply situation in the country will remain precarious till 2018/19 when: 1. Morupule A Power Station will be fully refurbished (by end of 2017) 2. Morupule B Power Station remedial maintenance will be done (2018 end) 3. Morupule B 5 & 6 Power Station to be commissioned by 2018/19
Botswana has made improvements on preventing and ending arbitrary deprivation of liberty, but significant challenges remain in further developing and implementing a legal framework, the UN Working Group on Arbitrary Detention said at the end of a visit recently.
Head of the delegation, Elina Steinerte, appreciated the transparency of Botswana for opening her doors to them. Having had full and unimpeded access and visited 19 places of deprivation of liberty and confidentiality interviewing over 100 persons deprived of their liberty.
She mentioned “We commend Botswana for its openness in inviting the Working Group to conduct this visit which is the first visit of the Working Group to the Southern African region in over a decade. This is a further extension of the commitment to uphold international human rights obligations undertaken by Botswana through its ratification of international human rights treaties.”
Another good act Botswana has been praised for is the remission of sentences. Steinerte echoed that the Prisons Act grants remission of one third of the sentence to anyone who has been imprisoned for more than one month unless the person has been sentenced to life imprisonment or detained at the President’s Pleasure or if the remission would result in the discharge of any prisoner before serving a term of imprisonment of one month.
On the other side; The Group received testimonies about the police using excessive force, including beatings, electrocution, and suffocation of suspects to extract confessions. Of which when the suspects raised the matter with the magistrates, medical examinations would be ordered but often not carried out and the consideration of cases would proceed.
“The Group recall that any such treatment may amount to torture and ill-treatment absolutely prohibited in international law and also lead to arbitrary detention. Judicial authorities must ensure that the Government has met its obligation of demonstrating that confessions were given without coercion, including through any direct or indirect physical or undue psychological pressure. Judges should consider inadmissible any statement obtained through torture or ill-treatment and should order prompt and effective investigations into such allegations,” said Steinerte.
One of the group’s main concern was the DIS held suspects for over 48 hours for interviews. Established under the Intelligence and Security Service Act, the Directorate of Intelligence and Security (DIS) has powers to arrest with or without a warrant.
The group said the “DIS usually requests individuals to come in for an interview and has no powers to detain anyone beyond 48 hours; any overnight detention would take place in regular police stations.”
The Group was able to visit the DIS facilities in Sebele and received numerous testimonies from persons who have been taken there for interviewing, making it evident that individuals can be detained in the facility even if the detention does not last more than few hours.
Moreover, while arrest without a warrant is permissible only when there is a reasonable suspicion of a crime being committed, the evidence received indicates that arrests without a warrant are a rule rather than an exception, in contravention to article 9 of the Covenant.
Even short periods of detention constitute deprivation of liberty when a person is not free to leave at will and in all those instances when safeguards against arbitrary detention are violated, also such short periods may amount to arbitrary deprivation of liberty.
The group also learned of instances when persons were taken to DIS for interviewing without being given the possibility to notify their next of kin and that while individuals are allowed to consult their lawyers prior to being interviewed, lawyers are not allowed to be present during the interviews.
The UN Working Group on Arbitrary Detention mentioned they will continue engaging in the constructive dialogue with the Government of Botswana over the following months while they determine their final conclusions in relation to the country visit.
Standard Chartered Bank Botswana (SCBB) has informed the government that it will not be accepting new loan applications for the Government Employees Motor Vehicle and Residential Property Advance Scheme (GEMVAS and LAMVAS) facility.
This emerges in a correspondence between Acting Permanent Secretary in the Ministry of Finance Boniface Mphetlhe and some government departments. In a letter he wrote recently to government departments informing them of the decision, Mphetlhe indicated that the Ministry received a request from the Bank to consider reviewing GEMVAS and LAMVAS agreement.
He said: “In summary SCBB requested the following; Government should consider reviewing GEMVAS and LAMVAS interest rate from prime plus 0.5% to prime plus 2%.” The Bank indicated that the review should be both for existing GEMVAS and LAMVAS clients and potential customers going forward.
Mphetlhe said the Bank informed the Ministry that the current GEMVAS and LAMVAS interest rate structure results into them making losses, “as the cost of loa disbursements is higher that their end collections.”
He said it also requested that the loan tenure for the residential property loans to be increased from 20 to 25 years and the loan tenure for new motor vehicles loans to be increased from 60 months to 72 months.
Mphetlhe indicated that the Bank’s request has been duly forwarded to the Directorate of Public Service Management for consideration, since GEMVAS and LAMVAS is a Condition of Service Scheme. He saidthe Bank did also inform the Ministry that if the matter is not resolved by the 6th June, 2022, they would cease receipt of new GEMVAS and LAMVAS loan applications.
“A follow up virtual meeting was held to discuss their resolution and SCB did confirm that they will not be accepting any new loans from GEMVAS and LAMVAS. The decision includes top-up advances,” said Mphetlhe. He advised civil servants to consider applying for loans from other banks.
In a letter addressed to the Ministry, SCBB Chief Executive Officer Mpho Masupe informed theministry that, “Reference is made to your letter dated 18th March 2022 wherein the Ministry had indicated that feedback to our proposal on the above subject is being sought.”
In thesame letter dated 10 May 2022, Masupe stated that the Bank was requesting for an update on the Ministry’s engagements with the relevant stakeholder (Directorate of Public Service Management) and provide an indicative timeline for conclusion.
He said the “SCBB informs the Ministry of its intention to cease issuance of new loans to applicants from 6th June 2022 in absence of any feedback on the matter and closure of the discussions between the two parties.” Previously, Masupe had also had requested the Ministry to consider a review of clause 3 of the agreement which speaks to the interest rate charged on the facilities.
Masupe indicated in the letter dated 21 December 2021 that although all the Banks in the market had signed a similar agreement, subject to amendments that each may have requested. “We would like to suggest that our review be considered individually as opposed to being an industry position as we are cognisant of the requirements of section 25 of the Competition Act of 2018 which discourages fixing of pricing set for consumers,” he said.
He added that,“In this way,clients would still have the opportunity to shop around for more favourable pricing and the other Banks, may if they wish to, similarly, individually approach your office for a review of their pricing to the extent that they deem suitable for their respective organisations.”
Masupe also stated that: “On the issue of our request for the revision of the Interest Rate, we kindly request for an increase from the current rate of prime plus 0.5% to prime plus 2%, with no other increases during the loan period.” The Bank CEO said the rationale for the request to review pricing is due to the current construct of the GEMVAS scheme which is currently structured in a way that is resulting in the Bank making a loss.
“The greater part of the GEMVAS portfolio is the mortgage boo which constitutes 40% of the Bank’s total mortgage portfolio,” said Masupe. He saidthe losses that the Bank is incurring are as a result of the legacy pricing of prime plus 0% as the 1995 agreement which a slight increase in the August 2018 agreement to prime plus 0.5%.
“With this pricing, the GEMVAS portfolio has not been profitable to the Bank, causing distress and impeding its ability to continue to support government employees to buy houses and cars. The portfolio is currently priced at 5.25%,” he said. Masupe said the performance of both the GEMVAS home loan and auto loan portfolios in terms of profitability have become unsustainable for the Bank.
Healso said, when the agreement was signed in August 2018, the prime lending rate was 6.75% which made the pricing in effect at the time sufficient from a profitable perspective. “It has since dropped by a total 1.5%. The funds that are loaned to customers are sourced at a high rate, which now leaves the Bank with marginal profits on the portfolio before factoring in other operational expenses associated with administration of the scheme and after sales care of the portfolio,” said the CEO.