Wednesday, January 26, 2022

Gov’t in costly Morupule B political fancy footwork

The Botswana government has taken a risky political decision to switch on the controversial Morupule plant although it was not ready for commissioning ÔÇô in a maneuver to buy time ahead of the general elections next year.

Experts close to the plant told Sunday Standard this week that, “for a project of this nature to be commissioned it needs to meet at least 95% of specification output. Morupule B fell below 50%; it was all a political decision. And it is bound to catch up with us.” The project which can only generate enough to mitigate load shedding is expected to unravel sooner than later.

Civil servants close to the project have even started arguing over the viability of trying to save the P13 billion project. There is an emerging school of thought that believes it would be cheaper and faster to start building a new power plant instead of trying to fix the Morupule B plant.

Another insider says the World Bank over-estimated Botswana’s ability to deliver a project of this magnitude when the institution lent out the money without technical back-up.

“It was a result of previous projects which the country has been able to deliver. The truth though is that today’s government is much more intellectually challenged than at any moment in Botswana’s history.”

To drive the point home, the civil servant compares Morupule B to the North-South carrier Project which was undertaken more than fifteen years ago at a cost of P1.5 billion.

“We had an option to choose steel pipes which would cost us P3 billion with a life span of 30 years. But we settled for GRP pipes at a cost of P1.5 b billion and a lifespan of fifteen years. When things went wrong we were not surprised. It was what we had factored in. I don’t think this particular government has the depth to even have foreseen the catastrophe that we are headed for with regards to Morupule B.”

He says the switch on was a “political decision” meant to mitigate load shedding which was beginning to hurt the reputation of the government.

“My worry is that it may never be possible to salvage the P13 billion project. Some experts are beginning to sound the view that it might turn out to be more economic to start afresh rather than try to salvage this mess,” he said.

The project recently ran into another crisis as the Chinese company contracted in the project, China National Electric Equipment Corporation (CNEEC) was reported to be blackmailing Botswana with a threat to pull the plug off the project or abandon it all together if they are not exempted from paying the P600 million they owe the taxman in unpaid value added tax (VAT).

The threat comes after the Botswana Revenue Services (BURS) obtained a garnishee order allowing them to impound the CNEEC payment from the Botswana Power Corporation (BPC).

Sunday Standard investigations have turned up information that the BPC was forced to violate the High Court order and pay CNEEC its money because the Chinese company was threatening to either abandon the project or switch it off.

The Chinese company had initially approached government for a tax exemption. When their proposal was turned down, they then turned to the BPC to masquerade as the importer of construction material from China, thus offloading liability for VAT on the Botswana parastatal. Although the Chinese company has been claiming its VAT refunds from BURS, it has not been paying its share of VAT, which has accumulated to a staggering P600 million.

It has emerged that invoices for the project are generated in China and payments are also made in China where the financing bank is based, and invoices are only presented to the BPC for purposes of issuing certificate to facilitate payments ÔÇô cutting out BURS. It has further emerged that although the project is experiencing failures, which have resulted in frequent power supply disruptions, the BPC has already disbursed more than 90 percent of the payment complete with certificates to back the payments.

Contacted for comments, BURS spokesperson, Refilwe Mogami, told Sunday Standard that “the garnishee order that has been issued only concerns the BURS and the said client” and cannot be discussed with a third party.

Responding to a Sunday Standard questionnaire, BPC spokesperson, Spencer Moreri, on the other hand stated that, “the Corporation is not in a position to divulge any information to third parties as per the contractual obligations of the contract in regard to communication”.

A number of local big names are being whispered as sub contractors in the controversial project and are believed to have been part of the massive tax evasion. Sources close to CNEEC have revealed that as part of its investigation, BURS has been demanding a list of all subcontractors in the project, but the Chinese company is cagey with the information.

BURS is understood to be preparing for a court battle with BPC and the Chinese company, and has already alerted the Commissioner of Immigration to ensure that CNEEC directors do not skip the country. With most of the payments due to CNEEC already disbursed, the cash strapped BPC may end up saddled with the P600 million VAT bill.

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