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Water Utilities losses up 232% to P166 Million

Water Utilities Corporation (WUC) has released their financial results for the full year ended 31st March 2021. Figures reveal ballooned losses for the state-owned corporation. Losses went up by 232% from P49.9 million in the previous year ended March 2020 to P166 million in the period under review.

The 31st March 2021 year-end was underpinned by devastating effects of the COVID-19 pandemic, in particular: eroded household income resulting in inability to pay water bills by customers on top of high consumption of water due to COVID-19 prevention measure of regular washing of hands. In April 2020 President Mokgweetsi Masisi declared State of Public Emergency to curb the spread of the COVID-19 pandemic in Botswana. A directive was further issued to Water Utilities Corporation to suspend disconnection of defaulting customers and keep the taps running in order to enable regular washing of hands.

However, this landed a massive blow on the corporation’s financials. Revenue from contracts with customers dropped to P1.811 billion from P1.825 billion. The corporation’s total expenses rose from P1.988 billion to P2.307 billion resulting in operating loss before tariff subsidies and grants of P465.9 million up significantly from P138.8 million recorded in the previous year ended 31st March 2020. Grant received from government was just a little over P167 million, a significant rise from P147 million received in the previous year.

After taking into account revenue from grant and tarrif subsidy Water Utilities Corporation operating loss stood at P298.6 million, still significantly higher than the March 2020 loss of P8.5 million. Loss for the year ended 31st March 2021 after Finance Income, Cost and Income tax stood at P166,043, 000 up 232% from P49,923,00 in the previous year ended 31st March 2020. Water Utilities Corporation’s biggest thorn on its flesh is defaulting customers who owe the corporation chunks of money.

In July, this year, Water Utilities Corporation (WUC) announced that it will step up its debt collection efforts in a bid to recover over P1.1 billion owed by its customers. The corporation, which is a parastatal under Ministry of Land Management, Water & Sanitation Services had been crying out loud appealing to members of the public and companies to pay their respective water bills.

Over the years WUCs technique has been to cut individuals water supply in a bid to force the customers to pay outstanding bills, however the strategy doesnt seem to work forcing the corporation to come up with other avenues to press water consumers into paying for the service which is the crust of everyday basic need. Water Utilities said unpaid bills that continue to pile up year in year out have now reached unbearable heights, levels so high that it can no longer absorb the heat.

The corporation announced on national television that it has now decided to engage debt collectors to go after people and companies that owe them a total of over P1.1 billion in unpaid bills. According to information revealed by the Corporation management, over P700 million is owed by the public or domestic users, while the remaining P400 million is owed by companies and organisations. Lebone Sedingwe a Revenue Executive at Water Utilities revealed in July that it was long overdue for the corporation to go after those reluctant to pay up for their bills.

Sedingwe said some customers would come to their revenue offices to negotiate and agree on payment plans, but thereafter never stick to it. It is under this backdrop that we have seen it is only best we engage those with skills to collect this debt on our behalf because it is too much, Sedingwe said in July. Permanent Secretary in the Ministry of Land Management, Water and Sanitation Services, Bonolo Khumotaka mid last year at the height of COVID-19 outbreak appealed to Water Utilities Corporation customers urging them to pay their outstanding water bills.

She said this would help the Corporation to recover costs and ensure it continues to deliver water to the nation. During COVID-19 lockdown WUC was only able to collect around P50 million per month from utility fees instead of the usual P150 million, a trend that spilled over to the rest of the year and the following year 2021 as economic hardship prevailed, curtailing peoples ability to pay their bills.

When COVID-19 intensified last year President Dr Mokgweetsi Eric Masisi instructed WUC to suspend its process of disconnecting water supply for defaulting customers. President Masisi indicated that the decision was imperative and necessary to enable Batswana to comply with COVID-19 protocols and requirements of hygiene and washing hands regularly. On the other hand, the Ministrys Permanent Secretary cried foul that Water Utilities was suffocating due to overwhelming operating costs that are not recovered.

We encourage all those who can pay their water bills to do so, this will enable us to continue servicing the country with the much-needed water during this period of COVID-19 pandemic, she said over a year ago. The Permanent Secretary further noted that it is crucial for WUC customers to pay their bills so that the Corporation recovers costs and keeps its workforce. Distributing water is expensive because we have to maintain our pipes and pumps to keep the water supply afloat. We appeal to Batswana to meet us half-way, even if it means paying half of the bill, it is very much welcome, she pleaded.

Khumotaka further added: The Corporation is employing Batswana, so for us to avoid cutting costs and coming to drastic decisions such as laying off some employees, it is important that we recover costs from Batswana who can afford to pay their bills. We have come up with new payment platforms, including digital and cell phone payments methods to make it easy for our customers to pay, she advised. In October, following the lifting of State of Emergency Water Utilities Corporation announced that the grace period given to customers with unpaid water bills would cease end of October issuing a serious warning that 1st of November penalty actions would be in full momentum.


Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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Food import bill slightly declines

20th March 2023

The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.

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