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.
Botswana Oil Limited, the government-owned petroleum company, has chosen not to take Botswana Energy Regulatory Authority (BERA) to court over the decision to turn down its application for exclusive import licence, its Chief Executive has disclosed.
In fact, the Willie Mokgatle-led institution has chosen the most diplomatic way of engaging with government on the matter, in a bid to find a harmonious solution. In an exclusive interview on Tuesday, Mokgatle, who is an old hand in the petroleum industry, said government, through the minerals resources, green technology and energy ministry has taken a decision to find solutions to issues related to the rejection of the licence by BERA.
According to the former Shell Botswana boss, the discussions will also ensure the two entities (Botswana Oil and BERA) who are from the same ministry avoid locking horns in a court of law. “I believe in the coming months a solution will be found,” said the optimistic Mokgatle.
BERA, the petroleum and gas regulator has given Botswana Oil thumps down, after the latter applied to be the sole importer of petroleum and related services in Botswana, citing several factors.
The verdict, which was delivered by BERA Chairperson Bernard Ndove, keeps the status quo, which permits multinational companies in the sector such as Puma, Engen and Shell to participate in importing petroleum and petroleum products into the country.
The regulator is clear on its decision to deny Botswana Oil such exclusive licence. “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. Accordingly, it is this failure by Botswana Oil not to state their financial readiness, that they are capable of being the sole importer, and with the absence of this information, the application is based on speculation, said BERA. By law, any application for this licence, Botswana Oil included, is supposed to provide evidence of their financial capability, but such information was not provided when the application was lodged.
Speaking to Botswana Guardian at the upmarket Rooms 52 hotel, Mokgatle indicated 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.
Mokgatle also revealed that the company, which has been registered privately, has also agreed with Omani Trading International to supply it with petroleum products on a credit basis. “This is a done deal (referring to the Omani),” he said confidently. Omani Trading is an Oman company which specialises in selling, marketing and supplying crude oil. Botswana Oil, which was established in 2013 applied for the licence last month.
Subsequently a hearing was convened which was attended by various stakeholders, being players in the oil industry, experts, the public and business associations among others. The other reason for the rejection is that at the time of lodging the application, Botswana Oil was still negotiating with various stakeholders for agreements and contracts for oil supply. This did not put Botswana Oil in any good stead since their submission meant that their capacity is dependent on being given the exclusive licence, added BERA. “However, the requirement of Section 39(2) (d) is that at the time of application one must have capacity. A demonstration of capacity is a prerequisite of the issuance of the licence,” said Ndove. Botswana Oil does not have sufficient storage capacity to secure 60 days of uninterrupted supply, said Ndove.
“Contrary to the submissions made by the applicant, government’s planned petroleum products storage programme clearly indicates that the construction of the Tshele Hills project, expansion of the Francistown depot and development of the new storage depot will only fulfill the 60 days stock cover by the year 2020,” explained BERA. As things stand, the domestic market consumes 1, 2 billion of litres of petroleum products on an annual basis, which amounts to 100 million litres of consumption per month, said the Botswana Oil CEO.
Once granted an exclusive licence, Botswana Oil will be coming with an additional capacity of 10 million litres which will add to an already existing capacity of 20 million litres which is the combined capacity of all top five oil operating companies in Botswana, said Mokgatle. He said that they are willing to start with importing 50 percent of the total requirements of petroleum products in Botswana, before gradually moving to 100 percent. However, BERA has refused to accede to this proposal, arguing that once the licence is granted it will immediately exclude other players from importing.
Botswana Oil Limited (BOL), a government company plans to set up mobile filling stations, beginning with five, in remote places that are currently not being serviced by big companies, an official has said.BOL business development manager, Bruce Buno told delegates at an Oil Industry workshop in Gaborone that plans to roll out the pilot project were mooted after realising that remote places were not being serviced by international oil companies.
“We are looking at establishing mobile filling stations, which can be moved from place to place. We are going to start with five which we will take to the most remote or rural areas,” said Buno adding that the stations will be set up in consultation with environment authorities. He said giant fuel companies operating in the country namely Puma, Shell and Total, have not expanded their operations to most of the rural areas on viability grounds.
As a result, communities in these areas bear the brunt of walking long distances to access petroleum. The concept of mobile filling stations is new in the country but has been adopted in other countries. Buno said the role of Botswana Oil is to make sure there is no shortage of fuel and every corner in the county is adequately stocked.
BOL was established in 2013 to support the government to ensure the security and efficiency of fuel supply to Botswana and promote active citizen involvement in the petroleum industry.Buno also said they assist citizen emerging companies in the petroleum sector to participate meaningfully in the industry.
“However, we have seen several people coming to us asking for finance but unfortunately, we don’t offer funds as this is the responsibility of Citizen Entrepreneurial Development Agency and other financial institutions,’ said Buno. He said that BOL also does not build filling stations for people but rather supplies them with fuel.