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Imported electricity rises in 2014 Q4

Data released by Statistics Botswana (SB) this week revealed that importation of electricity increased by 35.9 percent to 510,100 Mega Watt Hour (MWH) between the fourth quarter of 2014 and the same quarter of 2013.


“The increase in importation of electricity is attributed to the need to complement electricity generated locally, especially during the month of October 2014 as electricity generation locally was very low. As a result the country was forced to import more in order to meet the demand,” said SB.


According to Statistics Botswana, physical volume of electricity generation stood at 663.0 during the fourth quarter of 2014 as compared to 567.1 during the same quarter in 2013, indicating an increase of 16.9 percent physical volume of electricity generation for the third and fourth quarters of 2014.


The decline has been attributed to failure of power generators at Morupule B power plants as recorded during the months of October and December 2014. Last year, the Minister of Minerals, Energy and Water Resources Kitso Mokaila announced that all four units at the 600MW Morupule B power plant had broken down forcing the country to rely on imports for 100 percent of its electricity needs.

The facility, which was built by China National Electric Equipment Corp. and cost 11 billion pula ($1.2 billion), has been beset with delays and machine failures.


SB noted that in order to equipoise the electricity shortages, Botswana Power Corporation (BPC) increased output of the emergency power generators located at Orapa and Matshelagabedi to feed into the national power grid, even though this did not completely meet the demand.  


The Orapa and Matshelagabedi plants were designed to generate a total of 160MW from a diesel consumption rate of 292, 000 litres and 50,000 litres respectively for a maximum of eight hours a day.


While electricity generation fell in the last quarter of the year, Statistics Botswana figures show that on an annual basis Botswana produced more than 50 percent of distributed power in 2014 for the first time due to the contribution from Morupule B.


In 2014, electricity generated locally contributed 59.2 percent of the distributed electricity during the year 2014 as compared to 48.0 percent during 2013. “This notable increase is attributable to on-going developments at Morupule power plant, which has also subsequently led to reduced imports of electricity in 2014,” reads the report.


Mokaila said plans are underway to extend the import agreement with South Africa’s Eskom, which ends in December this year. Under the Eskom agreement, BPC can import 100MW on a firm basis, which can be increased by an additional 200MW, when available.


BPC also has other import agreement with power utilities in Mozambique, Zambia and Namibia. In an attempt to supplement local generation for the forth-coming winter season, BPC is also expanding generation capacity of its recently acquired Matshelagabedi power station to 105 MW from 70MW by May 2015.


According to the report Electricity Generation Index increased by 16.9 percent from 567.1 recorded during the fourth quarter in 2013 to 663.0 recorded during the same quarter of 2014.


On a yearly basis, Botswana imported 1.6 million MWH from 1.8 million MWH in 2013.

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Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

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Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

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Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

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