Botswana Development Corporation had admitted that liquidation of the infamous joint venture, Fengyue Glass project in Palapye worsened its financial position. The corporation’s Chairman, Blackie Marole said in a commentary on the BDC annual report for 2014 that the decision led to a full impairment of the investment.
“The decision to liquidate Fengyue Glass Manufacturing Botswana (Pty) Ltd led to a full impairment of the investment, which further worsened the financial performance of the Corporation,” the former Debswana Managing Director said.
“The impairment was spread over three years with a considerable amount in the prior financial year and a restatement in the 2011 and 2012 financials.”
The company was a joint venture between BDC and Shanghai Fengyue Glass Co. Ltd and it was set up in 2007 for construction of a 450 tonne float glass plant in Palapye. BDC said at the time that the project failed to meet its targets, including those of time and budget which affected the viability of the project.
“The Corporation assessed all possible options and, having taken all factors into consideration, has decided that the appropriate course of action is to petition the Court to liquidate the Company,” said BDC at the time.
The Corporation reportedly lost close to half a billion Pula in the project, which could have created hundreds of jobs and produced approximately 450 tonnes of float glass per day had it come to fruition. However, the new BDC Managing Director Bashi Gaetsaloe, said in the annual report that he has learnt the challenges besieging the country’s once crown jewel and is looking forward to facing them head on.
“I am confident that we closed the last quarter of the year, with a thorough understanding of our strengths and weaknesses and a decisive and transformational plan that will return BDC to profitability and set the foundation for sustainable growth,” he said.
In the year under review, revenue from BDC grew from P101.7m to P150.4m while Group revenue declined from P317.9m in the previous year to P286.8m in the current year. The slow-down in revenue at Group level continued to reflect challenges that the organisation is facing within its Subsidiary and Associate company structures. But at company level, BDC experienced a loss before tax of P67.1 m against a loss before tax of P222.2 m in the previous year.
“This loss at Company level is substantially less than the loss in the previous year and is reflective of key initiatives geared at managing operating costs, improving collections and executing turn-around strategies within our portfolio of companies.”
According to Gaetsaloe, during this financial year, the Corporation took a deliberate decision to cease new funding until the new business model was fully implemented. As a result no new projects were funded in the year under review.