Mystery over millions meant to bail Phikwe out

In need: The fund was established in 1991 and planned projects that would keep the town going even when BCL Mine closed PIC: THALEFANG CHARLES
In need: The fund was established in 1991 and planned projects that would keep the town going even when BCL Mine closed PIC: THALEFANG CHARLES

The Auditor-General estimates that a fund established 30 years ago to finance projects in Selebi-Phikwe in the event of BCL Mine’s closure, is holding about P709 million in 'unspent development funds', due to minimal withdrawals for projects.

Known as the BCL Sysmin Re-employment Account (REA), the fund was created by a partnership between government and the European Union in 1991. The REA received repayments of loans by BCL and Tati for preferential credit extended by the European Union. In this way, the REA turned the debt into a grant towards the diversification of Selebi-Phikwe, with a list of projects drawn up which would be funded to ensure the town survived even if BCL Mine closed down. Auditor-General Pulane Letebele in her most recent report, notes that the funds are largely untouched, a revelation certain to frustrate thousands of Phikwe residents and businesses who have suffered since the collapse of BCL Mine in October 2016.

Mmegi is informed that the REA funds were placed in an interest-bearing account, which is supported by Auditor-General reports from previous years showing annual increases in the balances held. “According to paragraph 42 of the Memorandum of Understanding between Botswana Government and the European Union, it was expected that all funds under the REA should have been spent by January 2019, or preferably earlier,” Letebele said in her latest report. “The development projects report dated May 2020, reflected that a total of 10 projects had been approved under the REA but only seven projects were complete. “The remaining three projects would only require P18,889,010, which still leaves a balance of P690,434,887.” Mmegi has established that out of the total funds available, only the Platjan Bridge projects and some work on the Selebi-Phikwe Airport were funded from the REA. The Platjan Bridge, completed last year was funded from the REA at a cost of P135 million. However, authorities in Selebi-Phikwe say the bridge could open up an economic corridor through the town and upwards to the Kazungula Bridge, if a 30-kilometre stretch of road from the bridge to main roads, was tarred. According to available SPEDU records, an amount of P432 million is required to build the 30 kilometre road and the EU had 'in principle' agreed to fund the project subject to a strategic impact assessment. It is unclear if the funding from the EU would come from the REA or other sources.

The original project list drawn up for the REA included the Selebi-Phikwe College of Applied Arts and Technology, the Botswana Mining Museum and Research Centre, an Acid Capture Plant, tourism infrastructure at Letsibogo Dam and others. None of the projects have taken off amidst reports of differences between government and the EU over which initiatives to fund and how.

SPEDU, the regional investment promotion agency which was expected to play the lead role in identifying projects, has previously noted that a review undertaken by the EU had resulted in funds for at least one project being withdrawn. Trend analysis of SPEDU’s annual financials and reports indicates that the agency has not effectively tapped into the REA and provides limited funding to small projects in the region. Insiders close to the matter told Mmegi the major challenge has been the signing of a fresh Memorandum of Understanding (MoU) between government and the EU which would spell out agreed projects and terms of accessing the funds.

The original MoU signed in 2011 was due to have been reviewed with a new, more relevant agreement due to be signed by the end of 2014. Mmegi is informed that this has not happened to date. “Nothing can be done without that MoU because the parties have to agree that this money will be used in a specific way,” insiders said. “It is not clear why things have been dragging for this long.” Top EU officials recently visited the north-eastern town for an update on the REA, meeting with authorities there who reportedly said investigations would be done into why no agreement had been secured.

This week, the Auditor-General did not respond to calls seeking clarification on the matter, while questions sent to the finance ministry on Wednesday afternoon had not been answered by press time yesterday. SPEDU officials and the EU were equally unreachable for comment.

Editor's Comment
A step in the right direction

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