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P24 million tender lands BPC in court

Acting BPC CEO: Edward Rugoyi

A local company, Drift In Investments (Pty) Ltd has dragged Botswana Power Corporation (BPC) before Justice Modiri Letsididi at Lobatse High Court. Through an urgent application, the company wants the state-owned power utility to show cause why certain orders should not be made final.

The Drift In Investments wants BPC to be ordered, interdicted and restrained from proceeding any further, with the award of tender no 4142/20 for various meters pending; the finalisation of the Applicant’s application for review of the respondent’s (BPC) decision to annul the tender and the finalisation of the Applicant’s application for review which awaits hearing.

In February this year, Drift In Investments submitted a bid to be awarded supply and delivery of single (1) phase and three (3) phase integrated GPS based STS prepayment smart meters with open standard communication protocols that was advertised as tender number 3890/19.
The tender in question was an open tender, which means all interested bidders could bid for it, including Drift In Investments.

The bid was duly evaluated and adjudicated by BPC’s procurement committee, the Executive Procurement and Tender Committee. Such evaluation and adjudication were preceded by the recommendations of the best evaluated bidder, who will proceed to sign a contract to offer such services.  According to Drift In Investments’ founding affidavit “attached hereto is a copy of the evaluation and adjudication report which placed the Applicant as the best bidder, hence the legitimate expectation, that mutatis muntandis, that it would sign the contract”.

Drift In Investments was the best bidder and was approved to be awarded to the tender at BWP 14 442 660, to supply and deliver a single phase split smart meters. Furthermore, Drift In Investments was awarded for the supply and delivery of Customer Interface Units (CIU’s) for an amount of P10 343 070.00.  “When these recommendations and approvals were to be effected, in a rather strange turn of events, the respondent somersaulted and nullified the tender. On minutes from the EXCO Procurement and Tender Committee, a request was made to the aforesaid committee to nullify the tender and bring it back as a selected tender,” court papers indicate.

The reasons stated were that the tender was cancelled because “the Corporation has taken a position to directly work with the reputable manufactures/ suppliers of smart meters that have the necessary expertise required in the implementation of a SMART GRID SOLUTION that the Corporation is embarking upon”.  The nullification was granted, and time was not wasted in listing the bidders for selective tendering. One of the listed bidders for manufactures/ suppliers of the split smart meters is Landis & Gyr which had been listed as the supplier to the Drift In Investments in the nullified tender.

BPC had commended the bid by Drift In because it had the above stated company (Landis & Gyr). “Drift In split smart meters sourced from Landis & Gyr have been supplied to BPC before and the performance is good. Besides the split smart meters, Landis & Gyr has got a good performance record also on the Maximum Demand (MD) meters and ordinary non smart meter BEC previously supplied to BPC for quite a number of years”.

According to the founding affidavit it came as a surprise then on the 22nd May 2020 when Drift In Investments was given a letter dated 18th May 2020 which corroborated the aforestated minutes that the said tenders were nullified.  The letter reads, “Please be advised that at its sitting of the 11th May 2020, the EXCO Procurement and Tender Committee approved the recommendation to nullify the above tender. We wish to take this opportunity to thank you for showing interest in doing business with the Corporation and assure you of our cooperation at all times”.

The founding affidavit contend that there were no basis whatsoever for cancelation of the tender which was floated publicly to a select tender when all the requirements had been met, only to turn around and chuck the bidders.  According the founding affidavit the cancellation was unlawful on the reason that; the procurement in BPC is done through a three tier system. It passes through evaluation, and the evaluation committee makes recommendations to the adjudication system, ultimately reaching the board for certain tenders.

Again there are various boards dealing with various tenders varying in the amounts. Each level of evaluation has a limit to the tender it can evaluate based on the value of the tender.  The present tender that the applicant is querying or had made a bid for, amounted to more than 10 million Pula. From its own admission, and the papers filed of record, the evaluation was carried out by the Executive Procurement and Tender Committee.

Drift In Investments also argues that in terms of the regulations of the Respondent of Procurement, the threshold for the Executive Procurement and Committee (EPTC) are amounts between P500 000.00 to P3.5 million.  The tender having been in excess of 10 million, the EPTC clearly stepped out of its mandate. It was not competent to deal with tender by adjudicating the same, therefore acting ultra vires their mandate/ authority.  “Such a decision is liable to be reviewed and set aside as it is unlawful, irrational and illegal.

I reiterate my averments further that save via this present Urgent Application, there is no facility under our law to obtain a stay execution of the Tender herein whilst the Application asserts its challenge against the adjudication of the same”.  While appearing before Justice Modiri Letsididi on few weeks ago, attorneys representing BPC from Armstrongs Attorneys said they were only served with court papers in the morning therefore pleaded with the court to be given some time to prepare and file their opposing affidavit.

Both lawyers met briefly and agree that it was short notice and that the court set a new date where the urgent matter and the review application will be heard.  Justice Modiri Letsididi advised that the new rule states that all matters dealing with tenders by nature are urgent because they are dealing with a lot of money that affects the economy.

Earlier on, BPC attorneys had urged that the tender in question is a different tender from the initial one something that was denied by the defence lawyers.  The matter has been ordered a status quo while the new dates were set for 6th November 2020 while the court will hear both the urgent matter and the review application.

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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