Mmegi Online :: Govt backtracks on P350m BPC management contract
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Last Updated
Thursday 30 June 2016, 08:53 am.
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Govt backtracks on P350m BPC management contract

Government has back pedalled on a deal in which it was to pay Irish company, Electricity Supply Board International over P350 million to manage the turnaround process of the Botswana Power Corporation (BPC).
By Brian Benza Wed 02 Mar 2016, 14:44 pm (GMT +2)
Mmegi Online :: Govt backtracks on P350m BPC management contract








Two years ago, government announced it was finalising a deal to award ESBI a three-year management contract to oversee the turnaround of the loss-making power utility.

Addressing the media in Gaborone yesterday, the Minister of Minerals, Energy and Water Resources, Kitso Mokaila said the contract offer was withdrawn with government now preferring to appoint a new management team.

“The management contract was going to cost government 26.5 million Euros (P351 million) over a three-year period. In the end, we decided the contract sum was too much and a decision was taken not to go ahead with the deal,” he said.

ESBI was due to start work in 2014 with BPC chairman, Sebetela Sebetela, saying the Irish company will be tasked with a mandate of turning around the financial and operational performance of the troubled parastatal by 2018.

Apart from posting perennial losses, BPC is also grappling with challenges of transforming into a power generator and distributor.

As part of a new strategy, BPC has readvertised most of the top jobs at the corporation with a view to have a new management team that will oversee the transformation.

It is understood the plan is to appoint a new CEO by July this year.

Among some of the projects that BPC is currently undertaking include the extension of Morupule B by 300MW, the refurbishment of Morupule A and the Greenfield 300MW

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power plant. Turning around of the financial performance of the parastatal, which posted a loss of P1.3 billion in 2013, will also be among the new management top priorities.

BPC is statutorily required to operate as a going concern with its Act specifying that it should conduct its affairs on ‘sound commercial lines and produce a net operating income by which a reasonable return can be measured’.

Turning around BPC into a profit making entity will also not only require further subsidies but also government nod to hike tariffs to cost reflective levels. At present, the Ministry of Minerals, Energy and Water Resources estimates that tariffs are, on average, 50 thebe below being cost reflective. Independent figures indicate that over the years, the gap between the BPC’s costs of supplying a unit of power and its actual sale price have risen from 14 thebe in 2008/09 to 28 thebe in 2011/12 and finally 50 thebe in 2014/15.

In the 2016/17 national budget, finance minister Kenneth Matambo allocated P1.35 billion to BPC to cater for emergency power supply. The corporation’s other major project also received a hefty allocation with Morupule power station rehabilitation at P135 million, North-West electricity transmission grid at P225 million and Rakola sub-station at P257 million. The cash allocation for BPC followed another P1.32 billion payout in the 2015/16 supplementary budgets.

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