Botswana Oil Limited is buoyant that the regulator, Botswana Energy Regulatory Authority (BERA) will have a positive second thought on its exclusive petroleum import license which it rejected nearly a year ago, Botswana Guardian understands.
Mid last year, BERA which is headed by Rose Seretse gave the company’s application for exclusive import of all petroleum and petroleum products thumbs down, arguing among others that Botswana Oil does not have financial and operational capacity to handle the pressure that comes with the license. Nonetheless, the company did not take the regulator to court but rather decided to engage with the parent ministry on a way forward.
When responding to this publication acting Chief Executive Officer of Botswana Oil, Meshack Tshekedi said they are upbeat a solution will be found, once and for all as far as the license is concerned.
“Ever since the license rejection we have been engaging BERA to look for a common ground and understanding and ways they can facilitate the license,” said Tshekedi. He was speaking on Wednesday from Doha, Qatar where he is part of a delegation of Botswana Investment and Trade Centre’s trade and promotion mission in the oil rich country.
Like the previous Chief Executive, Willie Mokgatlhe, Tshekedi is of the opinion the license should be granted to enable the state-oil company to transform the multi-billion Pula sector and create opportunities for citizen companies. Botswana Oil was established to support the government in achieving two broad national economic objectives of ensuring the security and efficiency of fuel supply to as well as promoting active citizen involvement in the petroleum industry.
Tshekedi, who is tipped to succeed Mokgatlhe in the company’s hot seat disclosed the Ministry of Mineral Resources, Green Technology and Energy Security is supporting them in their quest to get a license, which will effectively bar multinational oil companies from buying their supply from outside.
They will instead buy from Botswana Oil. However, BERA appears to doubt Botswana Oil’s readiness. “Botswana Oil has not submitted a business case in support of the proposed changes in the current arrangements for importation of petroleum and petroleum products in the country, therefore making it difficult to assess the costs and benefits of the proposal,” said the authority in its 8th May 2018 decision that rejected their application. Accordingly, it is this failure by Botswana Oil to state their financial readiness to be the sole importer, that the application is based on speculation, said BERA.
By law, any application for this license, Botswana Oil included, is supposed to provide evidence of their financial capability, but such information was not provided when the application was lodged. Back then, Mokgatlhe told Botswana Guardian that Botswana Oil is financially-ready to become the only importer of petroleum products in Botswana. He said, for every litre of petroleum products purchased by consumers, Botswana Oil is entitled to 17, 5 thebe. This allows the Gaborone-based company to go into the open market to raise cash if the need arises.
The former Chief Executive also revealed that the company, which has been registered privately, has also agreed with Omani Trading International to supply it with petroleum products on credit basis. “This is a done deal (referring to the Omani),” he said confidently. Omani Trading specialises in selling, marketing and supplying crude oil. Botswana Oil, which was established in 2013, resubmitted its application for the license last month.
Botswana’s petroleum industry which is worth billions of Pula and dominated by multi-nationals such as Pula Energy, Engen, Total among others. In the long term, Botswana Oil is expected to roll new fuel filling stations especially in underserviced markets.
Many questions still remain unanswered regarding corporate governance at Botswana Energy Regulatory Authority (BERA).It was revealed during examination of books of accounts by the Parliamentary Committee on Statutory Bodies and State Enterprises that a waiver for a petrol filling station was controversially awarded by the regulator after the board rejected the request by the board chairman.
BERA is responsible for providing an efficient energy regulatory framework for Electricity, Gas, Coal, Petroleum products, Solar and all forms of renewable energy. It was established through the Botswana Energy Regulatory Act 2016 and started its operations on the 1st of September, 2017.
BERA has eight Board members of whom four are permanent. BERA Chairperson Bernard Ndove told the committee that indeed he once got a call from “someone in high authority” that there is a complaint from someone who has put up infrastructure for a petrol filling station but BERA was delaying to issue the licence. According to the chairman a waiver was issued because the complainant indicated that he is already losing financially while he is ready to operate.
This was also confirmed by Chief Executive Officer Rose Seretse. Seretse however highlighted that the waiver was not issued to just that particular complainant. “We looked at all the applications that we had that we have delayed to act on. We then proceeded to issue a waiver for all those applicants whom we had delayed to give them licenses,” she told the committee.
In a twist of events Board Member Sidney Mogapi who is responsible for electricity revealed that no waiver was issued. Mogapi who is a full-time member of the board said, “The chairperson wrote to all of us board members regarding the request for the waiver.
“As board members we advised the chairperson that he could not do that. The waiver never occurred. We vehemently rejected the request as board members.
I think the CEO’s recollection is foggy.” This was denied by Seretse who posited that her recollection is not foggy and insisted that the waiver was issued and ratified by the board.She said the waiver was for several applicants whose applications were not attended to in time. She pointed out that the board delayed to meet and look at the licence applications.
Mogapi stood his ground that the issuance of the waiver was in contravention of the BERA Act. “The licenses were issued illegally. It was a miscarriage of duty because it was not supposed to happen,” said Mogapi.Another controversial issue that cropped up was the appointment of CEO, Chief Operations Officer, Finance Director and Human Resources Director.
Seretse, Ndove and Human Resources Director Nnosang Mhutsiwa could not state for a fact if the posts were advertised or Ndove headhunted and handpicked officers occupying those positions. This was after the committee Chairman Samson Guma sought clarity on whether the posts were advertised or not.
Guma would later put it to them that the posts were not advertised and if he is wrong they should provide proof to the contrary. He also asked the board chairman if he would resign if it is discovered that indeed he headhunted the officials and not advertised the posts. Mhutsiwa promised to go and look for such information and present it to the committee.
In June this year BERA Board suspended the chief operations officer (COO) Duncan Morotsi over the alleged improper appointment of a consultant from Tanzania to the Authority. According to the letter dated June 11, 2018, the suspension follows a preliminary report by a commission of inquiry team constituted by the BERA Board.
It discovered that there might have been impropriety in the engagement of Edwin Kiddiffu. Morotsi was suspended to allow for investigations. Guma also questioned why the investigations were being carried by BERA internally. He wondered how BERA could investigate itself. However, Seretse revealed that Directorate on Corruption and Economic Crime (DCEC) is also engaged in the investigations.
Engen Botswana, the country’s only-listed oil company, is delighted that government has established an energy regulatory authority, BERA, to level the playing field. The Act to establish the Botswana Energy Regulatory Authority (BERA) was passed by parliament last year. The Authority could not begin operations in the same year due to non-availability of funds.
BERA is among others tasked with ensuring fair competition within the industry. “Engen Botswana welcomes the recently established Botswana Energy Regulatory Authority (BERA), hoping that this body will stabilise the local petroleum product market, and ensure that technical and economic standards are followed,” Chairman, Dr Shabani Ndzinge wrote in the group’s latest annual report.
He said his company is looking forward to seeing how this BERA unfolds in 2017, ‘especially as the proliferation of retail petrol stations continues to grow’ Meanwhile, Freddie Motlhatlhedi an energy advisor, in the department of energy has told government’s Daily News that, BERA is expected to start operations this month (June).
Over the years, players in the energy sector, especially in the industry have complained that government’ setting of prices for their petroleum products in most cases works against them, resulting in limited profit margins. According to Ndzinge, the growth in the energy sector provides challenges, which comes with new and varied competition. Engen, which has a market capitalisation of P1, 5 billion will not sit down and let players overtake it.
“It (competition) also allows Engen Botswana Limited to showcase its industry-leading distribution logistics capability, retail excellence and innovation – factors that we believe will continue to differentiate us from the competition,” wrote Ndzinge who is also Vice Chancellor (finance) for Botswana International University of Science and Technology (BUIST).
Engen’s Managing Director, Chimweta Monga wrote in the 2016 annual report that more and more retail filling stations for well-known brands and independent entities are mushrooming, thereby keeping them on their toes. The closure of some mines, such as BCL and Tati Nickel mines has affected commercial sales at the company. “Retail sales were also affected in these areas due to a decline in purchasing power by local residents as a result of the difficulties encountered by the mines,” said Monga.
In the past year, Engen piloted the 1Card system to a number of selected customers. The system, which will be launched countrywide this year, will enable individuals and companies to load credit on to a ‘swipe card’, and use it to pay for fuel and related services at any service station in the Engen retail network.
The company remains strong despite the fragile economic recovery which has dampened consumers’ confidence. For the year under review, Engen recorded a profit after taxation of P132million up , by 21 percent year on year. ‘