For some time now, Botswana Power Corporation has been swimming against the tide.
A recent decision by Government allowing the corporation to sell some of its assets, lay off staff and share some of its generation mandate with Independent Power Producers has meant that one of the country’s most important companies will also have to fight headwinds before it reaches safe shores.
Competition, it would appear is coming thick and fast in the direction of BPC.
Monopoly is all that the BPC has ever known. And those days are coming to an end.
Yet if the new Chief Executive Officer was worried about the difficult road ahead ÔÇô for himself as well as for the corporation, Stefan Schwarzfischer did not show it.
At a media briefing on Monday he was eloquent, optimistic, ambitious and most importantly, visibly well prepared.
While many of his predecessors at BPC have been buttoned up, with undisguised aversion towards the media, Schwarzfischer is pretty much relaxed and media friendly.
His vision of a future BPC is a refreshed version of what has been called Masa 2020 ÔÇô a transformation exercise that he inherited when he arrived late last year before tweaking and modifying it to give more impetus, more clarity and a sense of urgency.
The interaction between Schwarzfischer and the media was a no-bounds-barred affair ÔÇô a kind of shock therapy for the media accustomed to guarded exchanges with corporate executives.
What Schwarzfischer wants, it became clear from early on is to succeed in his own terms.
He started the presentation by stating that BPC was cash-strapped ÔÇô a rare admission for an executive working for a state owned enterprise in Botswana where the ingrained culture follows an easily predictable sequence; denial before burying one’s head in the sand.
He added that if the corporation was to survive, going forward it had to do business differently.
That meant it becoming leaner, more efficient and more focused.
The restructuring process, which by the way has already started will see a significant number of staff at BPC losing their jobs. And that applied to everybody, including senior executives at the top-most bands, who Schwarzfischer was quick to point out will be first in the firing line.
The objective, he said is to achieve the corporation’s financial turnaround.
While the transformation sounds like a root and branch overhaul, his view is that it is actually 70 percent strategy and 30 percent transformation.
Then he moved on to clarify issues surrounding the sale of Morupule B. With no prodding he started by dispelling what he said were untrue rumours, chief of which is that Morupule B has already been sold or that a price tag has already been agreed with the preferred Chinese buyer.
That process, he said is ongoing. And will continue parallel with the ongoing human resource restructuring at the organization.
He made it sufficiently clear that if at the end of the negotiations BPC, on behalf of Government felt unhappy with the offer from the Chinese, the negotiations will be called off, and get the bid opened to other prospective buyers.
Nothing at this time, he later admitted, was contrary to media speculation cast in stone.
The pressure on BPC has been long in coming. And the picture painted by the CEO is by no stretch a rosy one.
General lethargy, official incompetence, inefficiency at both the board and executive levels have been at the heart of the corporation’s stagnation since the 1990s.
That era was followed by a disastrous management of Morupule B, the country’s biggest development project ever with a capital budget nearing P20 billion when adding cost overruns, lost revenue and ancillary costs in repairs and consultancies.
The failures of Morupule B have provided detractors with easy tools with which to attack the corporation, its executives, the board and more pointedly cabinet who are the shareholder.
The project assumed a centre stage in the last elections in which Governing party performed decimally. Commentators are agreed that Morupule B is a debate that the current Government cannot win.
Other than the drying up of cash injections from government ÔÇô for a long time, the corporation’s major lifeline during such crisis, in 2013/14, BPC became a butt of jokes as the corporation grappled with persistent public outrage over power outages. Over those two years, the corporation became a public punchbag ÔÇô literally, as its attempts to remedy Morupule B often cut an image of an apprentice firefighter unsure of how to plod their way through the blaze.
It was a crisis that went far beyond the damage in the corporation’s public image.
The finances were buffeted. And to this day BPC has never fully, recovered, at least not to the pre-crisis levels
Now the CEO says Morupule B is, as the media has for months speculated, indeed up for sale.
The preferred buyer, perhaps not unsurprisingly is CNEEC, the same Chinese company that built the plant and, as things sand, failed to deliver it.
“It [the sale] is a cabinet decision. If there is no agreement two more buyers are already lined up for negotiations,” he said.
A process of retrenchment, which he euphemistically calls restructuring is in the meantime fast gaining pace.
And a swift timeline already approved by the Board and cabinet has been shared with staff ÔÇô from executive level right down to the bottom-most rungs.
The CEO says it is important to observe the set strict time lines to avoid a situation where the corporation slides into back into a muddle often associated with similar restructuring exercises
That process is being vigorously implemented, because, as Schwarzfischer puts it, “there is no need to have a good strategy on paper and not implement it.”
Other than selling Morupule B, the CEO has made it clear that he expects other independent power producers to come on board shortly, as BPC streamlines itself and concentrates on transmission and distribution.
It is a blind article of faith that things will in the end turn out all right for BPC following the ongoing restructuring.
There are many uncertainties consuming the corporation, most importantly staff.
Added to that is the fact that Botswana is replete with examples of corporate restructuring exercises that while implemented with gusto turned out horribly wrong.
That the BPC finances are under strain is a glaring reality confessed to by the CEO.
In the same breath he has ruled out going to the market to raise cash.
He is however non-committal when asked if the shareholder could be approached to inject any further cash in equity.
From cabinet side, it is abundantly clear that Government does not want to spend a penny more on BPC.
And after burning its fingers with Morupule B, it is unlikely that Government will be underwriting any6 further loans, much less pumping any direct cash in equity.
Then there are additional operational gray areas.
Weaning the distribution mandate, or at least a portion of it away from the corporation is no guarantee of efficiency, much less of cash.
One thing is certain though; the arrival of competition is fast gaining pace.
While in the past BPC was always able to stave off similar crosswinds like current ones, it did so on account of state protection and legally enforced monopoly.
Those days, according to Government sources are fast coming to an end.
The emerging narrative inside Government is that the entire energy sector of the country needs an overhaul.
And that has to start with BPC, which is going to have some of its generation mandate weaned off through the sale of Morupule B.
Critics of the BPC monopoly are in the meantime not holding their breath.
From its inception, BPC has been a quintessential government owned monopoly, enjoying unfettered stranglehold on energy generation, transmission and distribution.
In the absence of an industry regulator the behemoth has also enjoyed the unofficial title of being a policy maker as well as defacto tariff setter, taking advantage of a weak, poorly staffed and poorly trained staff at the Department of Energy Affairs at the line ministry.
Critics argue that whatever the outcome of the restructuring, BPC will still wield overarching power and influence in the industry.
At least two Independent Power Producers are expected to join the fray in the near future.
But then those producers will for a long time to come will still be beholden to the corporation as the sole transmitter, distributor and owner of the sprawling national grid.
