On Monday, it was announced that Puma Energy, a Swiss petroleum powerhouse with more than 30 subsidiaries across the globe, had snapped up full ownership of BP's assets in Botswana, Namibia and Zambia and 50 percent equity in BP Malawi and BP Tanzania.
The announcement came after months of speculation as to the winning bidder in the scramble to acquire BP's assets, following the UK giant's March decision to disinvest.
This week, highly-placed sources close to the Puma Energy deal revealed that government had put in a bid for BP's assets earlier in the year, hoping to anchor the envisaged state-owned oil company on these. Had government been successful, the state-owned oil company would have leveraged off BP's extensive distribution and service station network to provide fuel to public vehicles, operations and others.
According to the sources, going into the bid, government was confident, based on its commitment to give BP fair value for its assets and the expectation that the petroleum giant would give it first right of refusal. The latter, sources said, was based on a 35-year-old relationship between the two, during which BP has secured key government and quasi-government contracts such as the Central Transport Organisation, BDF, BCL Mine, Debswana and others.
"Government put in a bid this year but was beaten by the majority shareholder in Puma Energy, as announced this week. They beat government partly because they had a higher bid that linked to refineries and other considerations, while Botswana was only looking at BP's domestic assets," said one government enclave insider.
"Botswana was a good host for BP's business over the years and when they decided to leave, they should not only have put their interests ahead, but also the country's interests.
"This is the long-running debate about allowing multi-nationals to exclusively handle a strategic asset such as fuel. And this is one of the driving reasons behind government's determination to establish a state-owned oil company, as is the case in most other countries."
BP officials have frequently stressed that they wished to dispose of assets in all five countries as a bloc, as opposed to "piecemeal disposals." This approach, led by BP's Acquisitions and Mergers Division in London, would derive better value for the petroleum giant due to the premium bidders would pay for all five countries as opposed to one.
"For instance, Puma Energy, through the deal, now has a cross-continental presence from Namibia, through Botswana to Mozambique where they already had a business. This advantage is part of the premium they paid on top of the actual valuation of BP's assets.
"BP would not be able to demand this premium if it sold to the Botswana government which was only interested in Botswana or to any other investor interested only in one country," explained the insiders.
Whatever the rationalisation, BP's decision is understood to have rubbed government the wrong way, particularly as the state had national strategic interests in mind in making the bid.
"When petrol prices went out of control in 2008, government was only able to sit and watch the situation unfold. The government was equally powerless when we had fuel shortages earlier this year owing to problems in South Africa," said another government insider.
"Petroleum being a strategic asset to the economy, our feeling is that government needs to have a role to ensure security of supply and also to make sure that the cost to the ordinary person is as fair as possible.
"It's the fuel majors who determine how much is paid for fuel; they may say its government but there's very little leverage in terms of playing around with the figures. Thus, we strongly felt that there was need to open the market and encourage entry of indigenous companies and more competition.
"We were not looking to reinvent the wheel and we benchmarked; only one or two countries don't have national oil companies. These companies' role is to ensure security of supply within the country and provision of adequate infrastructure." The envisioned oil company, the insider said, would build a strategic buffer for national oil supplies and play a role in the provision of infrastructure, imports, pricing and the opening of the market to different players. Security of petroleum supplies is provided for under NDP 10.
BP's decision, therefore, has dented government's ambitions to fast track this process. However, according to the sources, Botswana may not take the latest developments lying down. Options, sources said, include looking at the massive government business awarded to BP and even legislation for a certain percentage of product in the market to be brought in by government's oil company.
The BP's lucrative government contracts - which include the 272, 000 litres per day of diesel to the 90 MW Orapa power station - formed part of the valuation in the deal with the Swiss company.
Puma Energy's Chairman, Pierre Eladari told Mmegi that the petroleum giant did not anticipate any blowback from other bidders for BP's assets.
"I'm not sure that our performance in the local market and government's bid will have anything to do with each other. In terms of how confident we are, we have been very successful in markets similar to Botswana, providing high service.
"Also, we are ready to invest in Botswana because we believe in expanding the business and we don't see any reason against this. We have a strong track record in Africa which has been very well accepted by customers and governments around the world and we don't see that we will have a big problem."
Declining to comment, BP Botswana officials referred questions to government where the Energy Affairs Department also declined to comment.
" We are not in a position to comment on the number of bidders or their identity. I believe government would be the best placed to get answers from," said BP Botswana General Manager, Mahube Mpugwa.
Botswana's situation partly mirrors Namibia's where the state-owned oil company, Namcor, initially enjoyed its government's support in a bid for BP assets in that country. The Namibian government, however, withdrew its financial backing of Namcor's bid saying it was concerned about the parastatal's cash problems, The Namibian reported.
In Namibia, Namcor imports 50 percent of that country's fuel needs and the BP deal would have enhanced its reach into the marketing business.