Botswana Oil should not read any malice in the judgment against itself by the Botswana Energy Regulatory Authority.
If anything, Botswana Oil should judge itself unlucky ÔÇô a victim of a sincere and genuine mistake borne out of a bad grasp of economics.
Just recently, the energy sector regulator, BERA made a ruling that Botswana Oil Pty LTD, a private company wholly owned by Botswana Government could not be allowed to become the monopoly importer of oil products into Botswana.
Botswana Oil had approached BERA arguing a case that based on the margins at which oil is sold, the savings could then be used to develop the country’s oil industry.
Botswana Oil also argued that if all retailers bought from it, citizen start-ups could compete for such big contracts and tenders of fuel supply especially those in the mining industry.
At the moment, small citizen companies are not able to compete with international giants like Shell, Puma, Engen, Total, Caltex etc.
The ruling by BERA was a textbook judgment of a case premised wholly on market liberalization.
As a newspaper we are for liberalization and we fully subscribe to private sector empowerment and participation. We are unashamedly wedded to free market economics. And we hold a view that Government participation in business should be deployed on a case by case ÔÇô and even so, sparingly.
We think the market is by far the most efficient vehicle when it comes to resource allocation
But we are also fully awake to Botswana’s unique economic circumstances.
Owing to the stage at which we find ourselves as a country, there is still a need for protection of certain natural monopolies.
These include water, energy, and some other key and strategic industries like telecommunications.
Liberalisation of these industries should be done discreetly and employing baby steps.
This means paying abnormally high attention to the attendant risks, and also making it conditional on those in the market, to pay attention to investing on their industry infrastructure and also to safeguarding not just the consumer but also the country’s strategic interests as well as national security.
From above it would be clear that we have provided a deliberately long-winded way to and marry free market economics and state intervention.
The two, in our opinion are not mutually exclusive, as some might make us believe.
A good case exists for the two wings of economics to exist side by side.
Botswana Oil is a company wholly government does not make it a parastatal.
It is a private business, capitalized by public money to serve a particular national strategic need.
Like we say above, while ruling by BERA was in our view genuine, economically, it gets really murky.
An impression has been created by the regulator that multi-national corporations like Shell, Puma, and Engen deserve protection against or from Botswana Oil.
Another impression is being created that Botswana Oil in the oil retail industry, which of course is not the case.
A further impression has been created that these multi-nationals really have the interest of this country at heart more than is the case with Botswana oil.
The truth though is the opposite. These multi nationals are doing very little to develop, not just the country but also their very industry in the country.
For them Botswana is nothing more than a market, there to be harvested ÔÇô nothing more, nothing less.
That is not the case with Botswana Oil which has a clear mandate to keep the country’s fuel reserves at a level that would not jeopardize the economy.
Botswana oil also has a clear obligation to develop citizen businesses, and it is our hope that both the Board and executive management understand and take this obligation seriously.
Elementary points first!
Botswana Oil is not in the business of competing with retailers like Shell, Engen, Total, Caltex etc.
Many of these companies have their decisions made not in Botswana but in either Cape Town, Johannesburg or even overseas.
It is not among their interests as businesses to develop indigenous owned oil businesses. That responsibility falls to Botswana Oil.
All these companies can leave Botswana tomorrow if their parent companies abroad so decide. We recently saw that with BP.
Having said the above we want point out that Botswana Oil does not get regular subventions from Botswana Government ÔÇô or is at least not supposed to.
The BERA ruling against Botswana Oil was very clearly made in good faith.
But it is bad economics in that it might in the end work against the very industry that BERA wants to protect and nurture through fair competition, growth, dynamism and vibrancy.
