The pain in parastatals

Mbongeni Mguni | Friday November 25, 2016 17:27

 

Botswana Power Corporation (BPC)

The BPC’s well-chronicled troubles stem from the failure of Morupule B to fully function, which in turn has resulted in huge operational losses as a result of increasingly expensive imports and non-cost reflective tariffs. The BPC also suffers from operational inefficiencies, including system losses and poor recoveries. The latest round of job losses is focussed at Morupule B where a decision to divest has been taken.

The new investor will likely retain some, but not all of the previous staff.  New CEO, Stefan Schwarzfischer is globally renowned for “organisational transformations” and is expected to swing the axe at BPC, having previously been involved a restructuring at the Botswana Meat Commission. The planned retrenchments will be the latest in a long-running series of rationalisations and redundancies at the BPC.

 

Water Utilities Corporation (WUC)

 The WUC’s woes emanate from the ambitious 2009 Water Sector Reforms Programme under which the Corporation began taking over the supply of water to all urban centres and villages. As stated by the previous CEO and chairman, as well as the current leadership, the process inflated the WUC’s operating expenses, while commensurate support, even by way of tariff adjustments, was not forthcoming from the treasury. The WUC has struggled in recent years, failing to pay workers and meet its obligations. The Corporation needs P1.5 billion for operations and another P10 billion to spruce up and develop its infrastructure. The expected retrenchments are the fourth round in recent years.

 

Botswana Housing Corporation (BHC)

The Corporation has hit turbulences in recent years as government has frozen increases to the rentals BHC charges tenant since 2004, while the cost of new developments has eaten away at the cashflow. The rental freeze has meanwhile been accompanied by a rise in maintenance costs of the same assets, meaning the BHC is hit in the pocket twice. A slowdown in property sales has also severed the Corporation’s remaining lifeline, leaving it almost comatose.

 

Air Botswana

The national airline has been struggling to break even for years and was the chief target of the privatisation policy. The airline’s aging fleet, high maintenance costs, equipment failure, route redundancy and pressure from competition has led to running losses over the years.  A number of aircraft are grounded for good and refleeting is yet to take place. The latest job cuts follow a narrow escape for 300 workers in 2007 when the SA Airlink deal fell through at the last minute.