Minister of Finance and Economic Development Kenneth Matambo insists “due diligence” is provided for in defiance of opposition Members of Parliament who are skeptical of government fiscal approach, citing the Barclays Bank of Botswana loan guaranteed to the embattled BCL just few months before the mining company was closed.
At the guarantee of the government, Barclays Bank of Botswana entered into a loan agreement with BCL which the opposition MP Dithapelo Keorapetse maintained was concluded surprisingly just within six months before the liquidation of the Selebi-Phikwe mining company.
“Due diligence … Yes we exercise due diligence,” was all Matambo could say, responding to a follow-up question from opposition MP Phenyo Butale who was puzzled of the transaction at such a critical time for the survival of BCL already known to be on its death bed.
BCL was recently put into liquidation throwing thousands into the streets unemployed and the country’s economy into uncertainty.
A total amount of US2 114 301.25 has since been paid from April to November 2016 as interest payments to Barclays Bank of Botswana on a loan extended to BCL guaranteed by government.
“Of this amount US$1 470 million was paid by government on behalf of BCL covering the months of October and November 2016 following the provisional liquidation notice,” Matambo said, dismissing suggestions the government knew about the imminent closure of the mine at the time of transactions.
“At the time the request was submitted to Parliament for approval of government guarantee, the government did not know that BCL would be liquidated in six months’ time as implied in the question of the MP,” the Minister added.
“The loan facility was to serve as an interim measure to avoid disruption to the business. The BCL Group was in the process of raising US$250 million from the markets through a medium term bond. However, this process was put on hold in July 2016 when it became apparent that the nickel and copper prices remained depressed,” Matambo said, noting the prices were not recovering fast enough and the appetite for the bond was significantly lower compared to the time when the process was initiated in October 2015.
The guaranteed loan was meant to be a bridging facility to settle short term debt facilities and pay creditors who provided supplies and services required by BCL, the Minister further said, concluding “adequate work was done prior to extending the government guarantee to cover the US$100 million loan.”
Concerned about the plight of his Selebi Phikwe constituents and the controversial fiscal prudence of the transaction at the time BCL was doomed to collapse, Keorapetse posed the initial question in Parliament.
The opposition believes BCL mine could be saved, with the continuing falling commodity prices used as a scapegoat to benefit the ruling party elites interested in the sale of the facility in the future.