Paul Smith, the Chief Executive Officer (CEO) of Mineral Development Company Botswana (PTY) LTD (MDCB) has been fired with immediate effect.
MDCB is wholly owned by the Botswana Government. It was formed in August 2015 to help government manage all its mining assets. The company is mandated to provide effective management and optimisation of the government mineral investment portfolio in the mining industry.
Smith’s relationship with almost all the stakeholders and his principals is said to have been wanting. This led to many of them complaining, among them a key stakeholder, De Beers, who is said to have threatened to act if nothing was done. BG News can reveal that Smith received his marching orders via a letter from Minister of Mineral Resources, Green Technology and Energy Security, Advocate Sadique Kebonang on Wednesday. Kebonang’s decision was informed by MDCB board recommendation that Smith should be fired. The board made the resolution at its Monday meeting.
Kebonang confirmed to BG News that he has fired Smith. “The MDCB board had a meeting on Monday and made a recommendation that Smith must be fired which I have acceded to”.
Signs that Smith was not going to last in his lucrative job which is believed to carry a package of between P2 and P3 million per annum have long been visible. Late last year, the board summoned him for a disciplinary hearing where he was asked to show cause why he could not be fired. Kebonang saved him when he asked to hear both parties to try and reconcile them. Smith’s disciplinary process started with the Board writing a letter and giving him 10 days to respond. It was not clear who constituted the Disciplinary Committee that summoned Smith, but what is clear is that the date of hearing was set for first week of December 2016.By then the Board wanted Smith to go because he had allegedly acted outside the mandate of the Board in some occasions, or disregarded their recommendations. At other times Smith allegedly kept or failed to share vital information with the Board, but instead passed it to higher authorities without approval from the Board. He has allegedly compromised the reputation of the Board in the way he deals with other stakeholders, such as the former BCL Board which he allegedly did not give the best cooperation. Amongst those who were reported to be unhappy is Debswana Board following their series of meetings late last year.
But the decision to fire Smith started to build up when government decided to sell the BCL mine assets to the Emirates Investment House (EIH) of the United Arab Emirates (UAE) following his alleged lack of cooperation and ‘disrespect’ for his employers and key stakeholders at large. He allegedly tried to frustrate Minister Kebonang’s efforts to have the due diligence process on BCL mine done by EIH. That’s when Kebonang put his foot down by ordering Smith to cooperate with the process or face the chop.
Government shares recalled from MDCB
It is said his general conduct led to Minister Kebonang to recall all government shares from MDCB allegedly because many stakeholders were complaining about Smith’s conduct during official meetings.
Reliable sources told BG News that Kebonang wrote letters to all stakeholders amongst them Debswana, Diamond Trading Centre (DTC) Morupule, Soda Ash Botswana, as well as a South African based Company holding government shares on De Beers, informing them about his decision to recall government shares from MDCB. BG News has it on good authority that the BCL shares were transferred to MDCB just a day before the company was put on provisional liquidation. All along the Ministry of Finance and Economic Development had been refusing to do so advancing reasons that they could only make the transfer once Parliament had sanctioned the move. When Smith took office in February 2016 his immediate task was to work closely with BCL management to oversee a process of streamlining the mine’s operations. By then government and, or MDCB had engaged consultants to see how best to deliver the shares because of cost implications. The first assets to be transferred were Morupule Coal Mine and BCL.
Mokaila and Smith
Smith was appointed by the then Minister of Minerals, Energy and Water Resources, Kitso Mokaila. Briefing Parliament then Mokaila said his ministry has engaged consultants to provide transactional advisory services for the transfer of these assets, which he added was expected to be completed before the end of the second quarter of 2016. He revealed that Debswana Diamond Company owns MCM, a joint venture between De Beers and government.It's said that in due course Smith started to overrule everybody including the board a matter that later led to two seasoned and fierce Batswana administrators - Dr Akolang Tombale and Ms Dora Moremi- resigning their positions from the BCL board as chairman and deputy respectively.
The last person to resign who allegedly could not stand Smith’s attitude is the MDCB board chairperson, Regina Sikalesele-Vaka. Smith’s conduct allegedly brought differences between him and Mokaila, and may have contributed to Mokaila redeployment to the Ministry of Transport and Communications MDCB Head of Corporate Communications Esther Norris, confirmed via a media statement on Wednesday that Sebetlela Sebetlela has been appointed as Caretaker Chief Executive Officer in the interim period.
Botswana Guardian has reliably learnt that there is disagreement between Botswana Government and an Independent Power Producer (IPP) Marubeni Corporation who has been awarded a tender to build the multimillion pula Morupule B Units 5 and 6 power plants for an additional 300MW into the national grid.
At the centre of the agreement which has since put progress on a temporary halt is the reluctance by the Japanese and their associates to start construction over concerns that BPC will not be able to purchase their power hence they want government to give a sovereign guarantee something which government is not prepared to do. Instead government is willing to provide support guarantee.
The$800 million tender to expand Morupule B power plant was awarded to a joint venture between Japan's Marubeni Corporation and South Korea's Posco Energy last March. The latter is doing the Operations and Maintenance (O&M). Marubeni and the Engineering Procurement and Construction (EPC) contractor, GS Construction of Korea, were allegedly in the process of mobilising to begin construction of the power plant, which according to experts, was supposed to have started before the end of 2016 but were forced to put their plans on hold pending approval of their request.
The Japanese are believed to have made it crystal clear that they cannot go ahead with the contract unless government provides the sovereign guarantee given that BPC is not bankable and like many of its sister parastatals, is operating at a great loss. Minister of Mineral Resources, Green Technology and Energy Security Advocate Sadique Kebonang, confirmed the disagreement and that the two parties are working on an amicable solution. “We have signed the PPA in December. Initially the Japanese told us that they do not need any funding for the construction as they were to pay for everything with BPC just buying power from them. But the latest is that they are saying they need a sovereign guarantee from us because BPC does not have money.
“We told them as government that we are prepared to give a government support agreement, but not a sovereign guarantee in favour of “your bank”. They are still insisting on a sovereign guarantee which we do not understand as none of us either BPC or government is borrowing their money. It appears that they do not trust that BPC will be able to pay them. But in my view, the support agreement will be enough to enable BPC to pay them”. Asked when they will have reached an agreement, Kebonang said possibly by end of the month. “If we do not agree, then we should find ways of mitigating to reach an amicable solution”.
Marubeni Director, Sub Saharan Africa, responsible for investment to Power business in Sub-Saharan market Kazuaki Shibuya confirmed that they have signed the PPA as well as all permits and or licences needed. The permits include water use and generation, fuel supply agreement with Morupule.Asked when they were supposed to mobilise and be on site to start construction he responded, “within a few months”. His parting short was to confirm that Marubeni has obtained the Environmental Impact Assessment (EIA) for the project and that “We are searching for office space in Gaborone”, said Shibuya.
The BPC annual financial report
BPC annual financial reports for the year 2014-15 and 2015-16 confirm the fears by Marubeni. The 2015 final report confirms the bad financial state that the country’s sole power supplier finds itself in. The 2015 annual financial report indicates that BPC has a long-term debt of P8.345 billion. Further, that the Corporation’s loss before tariffs subsidy is P1.986 billion, while total revenues is P2.53 billion which means their revenue equals their loss.
Further, BPC operating cost is P4.6 billion. Although there is a great improvement, even the 2016 financial report released months outside the statutory requirement indicates that BPC is still running at a loss. The report shows the 2014/15 total comprehensive loss of P274.9 million to P99.6 million in 2015/16 financial year which is a positive improvement of P175.3 million on losses from previous financial year
When it comes to assets, the financial report shows that in the same year BPC’s total liability is P12.4 billion, and capital and reserves is P4.5 billion implying that the corporation is sitting on a huge liability. Government gave BPC a tariff subsidy of P2.3 billion in support of their operations in 2015 suggesting that under these circumstances, they are not a credit worthy customer for any power station developer who is going to sell power to them. The 2015 annual financial report indicates that BPC has a long-term debt of P8.345 billion.
Experts say that the closure of BCL has dented the confidence of investors on Botswana’s parastatals. But at the same time the fact that government was able to settle its debt obligations to BCL creditors has emboldened other investors dealing with local parastatals to demand government guarantee. They argue that the continuing closure of mines including BCL has not helped BPC situation as the mine is one of the major power consumers.
Government has failed to rescue BCL from its deadlock with Norilsk over the stagnant P3 billion Nkomati deal. Minster of Mineral Resources, Green Technology and Energy Security Advocate Sadique Kebonang has revealed that Minerals Development Company Botswana (MDCB) executives met with Norilsk Executive in London recently to speak about the Norilsk deal. Unfortunately, the negotiations were not fruitful, Advocate Kebonang stated without giving details.
The minister explained that MDCB executives told him that Norilsk insisted on the terms of the agreement. “They insisted on the deal which led to it collapsing. That is what I was advised on. Anything else is speculative”, the minister said. BCL find itself between a rock and a hard place as the acquisition of Nkomati Mine has not been finalised as BCL could not pay the P3 billion worth of the 50 percent stake. BCL Mine, through its Polaris II strategy aimed at diversification agreed with Norilsk Nickel to purchase a 50 percent stake in Nkomati Mine, BCL had agreed to pay US337 million in cash to Norilsk Nickel to acquire both Tati Nickel Mining Company and a 50-percent stake in Nkomati Mine. While Tati Nickel has been acquired, Nkomati is still owned 50 percent by African Rainbow Minerals (ARM) and Norilsk Nickel.
Minister Advocate Kebonang who was responding to a question by Selibe Phikwe West MP Dithapelo Keoraptse dismissed claims that MDCB executives have messed up the deal with Norilsk. Keorapetse had argued that according to information from BCL, Norilsk never asked for P3 billion as once off payment and BCL management had negotiated an easy and achievable payment terms but MDCB executives messed up the deal when they insisted on the less than P3 billion. “Part of the plan was obviously to pay Norilsk the P3 billion from the Nkomati concentrates and part of the profit from smelting of the Nkomati concentrates”, said Keorapetse. The minister however argued that government was never misled by MDCB. He said BCL was not profitable and there is no how it could have managed to pay the P3 billion.
“BCL sought P1 billion loan guarantee from the Government and the Government did that through Barclays Bank. A few months later, they sought another billion Pula which they said, ‘give us a billion Pula in September and give us another billion Pula in March.’ In a space of less than a year, the total amount that was sought by the BCL was P3 billion. BCL as a company has never made P3 billion. At the time when the commodity prices were very high, it never even reached P3 billion”, Advocate Kebonang said. BCL has been placed under provisional liquidation for four moths after which the liquidator would report back to the High Court on the way forward about BCL Mine in Selibe-Phikwe and its subsidiary Tati Nickel Mining Company in Francistown. BCL mine had around 4300 employees while TNMC had close to 700 employees.
BCL Board Chairman Dr Khaulani Fichani last month told a press conference in Gaborone that the acquisition of Nkomati is in principle. He stated that even though the shares have been signed off, the actual transaction has not taken place. “Where we are now is that we have to pay and we are given the shares. We are unable to go ahead with conclusion of the deal because of what we find ourselves in today. When we engaged Norilsk Nickel to purchase a 50 percent stake in Nkomati Mine we had a clean balance sheet. It is only that the process took long because this was not a one man’s deal- a lot of experts were involved. At the time when the deal was being sealed things were not looking good for BCL”, explained Dr Fichani adding that the Minister of Minerals in South Africa signed off the shares in August this year.
The assets of both BCL and Tati Nickel Mine Company (TNMC) will be sold to pay off creditors and employees’ severance packages and salaries, if no investor comes forward in the next four months.
Mineral Resources, Green Technology and Energy Security, Sadique Kebonang on Monday broke the devastating news to Tati Nickel Mine Company (TNMC) management that their mine would also be liquidated alongside BCL. Kebonang said that government had tried the best it could to bail out TNMC together with its trouble-prone mother body, BCL but to no avail. A source who attended the meeting said that Kebonang said that government would have to go to the High Court so that the two can be liquidated, as they no longer generate income.
“What is going to happen is that a liquidator will decide a way forward and hopefully investors will then chip in to save the situation,” said the source. “The minister said that in the meantime we can stay at home and listen to the radios for information pertaining to our status, if anything comes up they will call us,” said a source employed by TNMC. He said that employees of the mine have been warned against talking to the media. “We were told that, if any one goes to the media about this matter which they say is an internal issue, an example will be set of that particular person”.
President of Botswana Mine Workers Union (BMWU), Jack Tlhagale said the Minister and the Vice President (VP), Mokgweetsi Masisi informed the union that a liquidator has been engaged but failed to present documentation. “There is no evidence of such information, we were just addressed,” Tlhagale said.
He said the union blames management and the board for the collapse of BCL. In his view the management swallowed more than they could chew as they failed to manage money well and implemented so many things at once. “Government should also take the blame because they delayed to step in when they had a chance,” Tlhagale said. In addition, government should have monitored the situation before the mine collapsed.Tlhagale said that it is unreasonable for Kebonang to come and stand in front of the workers saying they should keep their ears glued to radio sets. He said that they should at least give them a time frame.
“We want a just contract agreement which will explain the time frame. For example, they should say on this date we will address on radio not say that people should listen to the radio,” he said. All these are clear signs that government does not value its people, he said adding that a transparent government does not do such things. “These people are abandoning their responsibility because they left people stranded with no plan,” Tlhagale said.
The last couple of days have been sad moments not only for the BCL employees but also for the business community at large. The Selibe Phikwe business community on Wednesday expressed great disappointment at the decision by government to close down the BCL mine.
At a forum supposed to have been addressed by Vice President, Mokgweetsi Masisi but addressed by Minister of Mineral Resources, Green Technology and Energy Security, Advocate Sadique Kebonang at Selebi Hotel in Selibe Phikwe, the business community told Kebonang and his team of senior government officials that there is no point to address them as they had already made their decision to shut down the backbone of Selibe Phikwe economy. Andrew Frantzeskou, General Manager of Syringa Lodge who has been a resident of Phikwe for the past 43 years, said Phikwe will be nothing without BCL. “We survive by BCL. The economy of Phikwe should have been diversified many years ago. All the businesses here will be forced to lay off staff. What happens to our properties, where do we go?” he asked rhetorically.
One former BCL mine superintendent who identified himself only as Smith, and had worked for BCL for 16 years asked the government how it let the situation to get out of hand when they could see that the mine was not sustainable. He said if at all what the government is preaching that the mine has not been making profit for its entire 40 years, why did it allow it to get to this stage. According to Smith, BCL is currently besieged by a crisis of management. Kebonang assured the business community that the liquidator will go through all the processes to check if indeed there has been mismanagement at BCL. Some of the businesses that have been sub contracted to BCL are left wondering how they are going to approach their employees to tell them that BCL is no more, and that they no longer have jobs.
Kumbulane Mabena of the Business Community Association in the SPEDU region expressed that, “the process of getting SPEDU and it moving forward has been a very slow one”. SPEDU is the next government’s vehicle to turn around the Phikwe town.
Mabena added that decision-making at government level is very slow and SPEDU officials are always saying that they are constrained. “As we move forward together as stakeholders, the business community is willing to help with ideas. Let us not take the usual route that we have been taking in making decisions, we should involve one another,” Mabena pleaded with the minister.
A representative from Morula Private School, where some of the BCL employees have school children attending there at a subsidised fee, asked if the fees would be honoured going forward now that the company has shut down. “Without the BCL subsidy, our school will close down in January 2017.” In response, Kebonang said the school fees for this month would be paid. As for the coming periods, the liquidator is the one who will be handling every matter that concerns the creditors.
Other concerns raised were that the SPEDU Board of Directors does not have a representative from the Phikwe region. Kebonang responded, “I do not have an answer to that, but it makes sense to have someone who understands the region so well sitting on the Board.” On other issues, he also revealed that the government has decided that it will set aside P13million per month to continue running the shafts that cannot be shut down now. Employees have been allowed to remain in the BCL houses. On the 7th February 2017, Warren Dixon, the liquidator will submit a detailed report on his findings to the high court.
The long-awaited tender for the construction of the P85 million all-weather Platjan bridge over the troubled Limpopo River, which joins Botswana and South Africa was awarded last Friday with construction billed to start early October
Botswana Guardian has it on good authority that the final evaluation meetings of the awarding of the tender process started last week Friday. The bridge, originally a long concrete slab supported by railings and mounted on pillars, over the crocodile-infested Limpopo River can no longer carry the heavy trucks that use it. During rainy seasons the bridge becomes dysfunctional as it gets completely submerged in water. In fact, recently the concrete slab was torn out by the pressure of the waters and was only restored thanks to the goodwill of the area business community.Speaking to Botswana Guardian, Assistant Minister of Investment, Trade and Industry, Sadique Kebonang confirmed that the Public Procurement and Asset Disposal Board (PPADB) awarded the tender last Friday. Kebonang said Cabinet had also decided to move the project from the ministry of Transport and Communications to SPEDU which falls under the Ministry of Investment, Trade and Industry.
In terms of what is happening with the progress of the construction of the Platjan Bridge, SPEDU has advertised the tender, the ITT is going through the evaluation. “The brief that we have is that by Friday (last week) the board should be deciding on the award having gone through the adjudication process. The budget was originally P100m; it is now P85m. We are hoping that the 11 kilometre gravel road will be done alongside the construction of the Bridge.”In an interview with SPEDU’s Chief Executive Officer Dr Mokubung Mokubung said the contractor awarded the tender would be expected to sign the contract, mobilise to the site and start construction in early October 2016.
This infrastructural development project will have overlapping second phase that involves construction of the 30 kilometre road from the bridge to the village of Mathathane which is a shorter route. In that case we expect tourists that come from Kruger National Park to come straight through the Platjan bridge through Bobirwa constituency to Selibe Phikwe. “SPEDU and Botswana Tourism Organisation (BTO) are on course to develop the dam based tourism surrounding Thune, Letsibogo and Dikgathong dams,” he said.The bridge is of strategic importance to the Bobirwa area which is rich in both wildlife and tourism sites amongst them being the newly constructed Thune dam- which will partially be used for irrigation purposes, Molema Trust – a wildlife trust composed of the villages of Mothabaneng, Lentswe- le- Moriti and Mathathane. Others are Mathathane Basket Weaving project and two of the country’s top tourism sites – Mashatu Game Reserve and the Thuli Block Belt. Most importantly, once the bridge and road are completed it will allow residents of Bobirwa, Selebi Phikwe and Mmadinare constituency to also participate in tourism ventures.
The bridge was first mooted in 2007 after Botswana and South Africa agreed on the Regional Action Agenda to identify gaps and prioritise projects that can promote regional integration and development such as upgrading bridges and river crossings connecting the neighbouring nations. The two countries then agreed to start with Ramotswa and Platjan bridges. South Africa was allocated construction of the Ramosweu bridge while Botswana got Platjan bridge. Ramotswa bridge is about to complete while Botswana has been dogged by delays allegedly caused by officials of Roads Department.With the ball now thrown on SPEDU’s court, it remains to be seen how it will affect the completion of the bridge and 25 kilometre road between Mathathane and Platjan. The road had been tarred up to Mashatu and Platjan junction about 11 kilometres from the bridge. The Bobonong – Mathathane road which joins Sefophe-Selibe- Phikwe is currently being refurbished.
Botswana will have deposited the instrument of the Marrakesh Treaty accession by the time it celebrates its 50th Anniversary, Assistant Minister of Investment, Trade and Industry Advocate Sadique Kebonang has promised.
Speaking during the official opening of the regional workshop on opportunities and challenges in the implementation of the Beijing and Marrakesh treaties, Kebonang said the treaty comes at a time when Botswana has taken a number of deliberate policy decisions to intergrate and provide for people living with disabilities. There has been an establishment of Coordinating Office for People with Disability (CPWD) in the Office of the President.
“The intention of placing this Unit at this level, is to develop and coordinate implementation of policies, strategies and programmes through mainstreaming them into the development agenda to empower people with disabilities,” said Kebonang. He said Marrakesh Treaty is a vehicle to facilitate more achievement in terms of addressing issues affecting people with disabilities.
The Beijing and Marrakesh treaties are the most recently adopted treaties in the World Intellectual Property Organisation (WIPO) in 2012 and 2013. “The Beijing Treaty is on audio-visual performances whereas the Marrakesh Treaty is to facilitate access to published works for persons who are blind, visually impaired and otherwise print disabled,” he said.
He expressed gratitude for the contribution and support that WIPO and the African Regional Intellectual Property Organisation (ARIPO) continue to extend to Botswana in the development and growth of Botswana’s intellectual property system. He said the Marrakesh Treaty was an important tool that could assist governments in ensuring that fellow citizens living with blindness, visual impairment and print disabilities have equal and timeous access to information. “Access to information and knowledge is a fundamental right to all and as such the visually impaired should also enjoy this right,” he said, adding that this would help them deal with some of the social challenges they face.
Companies and Intellectual Property Authority (CIPA) Copyright Administrator, Keitseng Monyatsi said the treaty would be of benefit to people with visual impairment or blindness as they are faced with challenges of delayed access to information due to the need to acquire authorisation to convert works into an accessible format. “Modern technologies allow for works to be converted speedily and at affordable costs, but the need for authorisation prohibits or delays entities serving beneficiary persons from converting and availing personal copies to them,” she said.