Phakalane standoff slashes BHC revenues
Keikantse Lesemela | Wednesday August 13, 2014 11:58
Commenting on the published financial results for the year ended 31 March 2014, BHC Chief Executive officer, Reginald Motswaiso, said the corporation’s financial performance has been challenged by the decline of its major income sources.
He explained how sewage connection delays in the area have affected sales of houses in the area. “The situation was worsened by high costs for construction, leading to low margins to make new properties affordable to our customers,” said Motswaiso. The corporation had sold 100 units to both foreign and local clients in Phakalane who couldn’t move into the houses because there were no water, electricity or sewerage facilities last year.
Upon completion of the 600 BHC Phakalane Phase II houses, there has been a disagreement over the township Act: Water Utilities Corporation (WUC) and Botswana Power Corporation (BPC) argued they could not provide utilities on private land. WUC stated that connecting water to additional developments in Phakalane would have catastrophic environmental consequences, given the inadequate sewage disposal outlet.
The conflict resulted in buyers failing to occupy BHC houses because they have not been provided with water and power.
However, Phakalane Estates owners and BHC earlier this year announced that they had reached an amicable solution to the standoff. The corporation’s operating profit declined by 40 percent to P43. 9 million compared to P73.7 million in 2013. Comprehensive income also decline by 57 percent to P16.3 million compared to P37.5 million in 2013.
“Though revenues are challenged, management is committed to ensuring that the corporation is self-sustaining through cost reduction and cost optimisation and investing in products that are quick to market,” said Motswaiso.
In order to mitigate the non-escalation in rental revenue, Motswaiso said the corporation now focuses more on selling than renting, in an effort to recover capital quickly and construct more houses.
“Though the profit margins are lower than what would be ordinarily charged by market, the corporation prides itself in being able to use the proceeds to build more houses for the nation,” he said.
Currently BHC is embarking on a marketing campaign targeted at sitting tenants to encourage them to purchase the properties they are leasing. “The objective of the campaign is to encourage home ownership among Batswana and get them to invest in property,” he said.
BHC project pipeline shows that its next developments will be in prime areas where the demand for products is high.
“These projects will mainly be in Gaborone and its surrounding areas. The delivery and sale of these flagship projects is expected to provide more houses for sale to the nation and increase home ownership,” said Motswaiso.
With the corporation now building Self Help Housing Agency (SHHA) houses and housing units for civil servants, it is now challenged to reach out to the most remote areas of the country. “While we acknowledge that this is not going to be easy, we have embraced the extended mandate as this is a nation’s calling and we have put necessary strategies in place to ensure that we positively deliver on this challenging mandate.”