Saturday, October 23, 2021

Khama raided NPF to bail out Wilderness Safaris

Acurious decision by former President Lt Gen Ian Khama raided P500 million from the cash strapped National Petroleum Fund (NPF) while boosting the bottom line of Wilderness Safaris by an estimated P100 million.

The former president has a financial interest in Wilderness Safaris. Sunday Standard investigations have turned up information that Khama in 2013, issued a Presidential Directive to the then Ministry of Minerals, Energy Water Affairs to regulate the prices of aviation gas and jet fuel.  The Presidential Directive directed the Ministry to pay Puma Energy Botswana around P10 million per month to subsidise aviation gas.

The biggest beneficiary of the Presidential directive was Wilderness Safaris which operates 35 aircrafts through Wilderness Air. Botswana is Wilderness Air’s largest and busiest operation, servicing over 20 camps and moving approximately 60 000 passengers per year, primarily from their hub at Maun International Airport.

Wilderness Air accounts for more than a third of Botswana’s 172 000 unscheduled passengers a year according to 2016 statistics. Wilderness Air also operates slightly less than 50% of the combined unscheduled fleet owned by KASAC, Safari Air, NAC Botswana, Delta Air, Flying Mission Services, Mack Air Services, Moremi Air, Top Air Services, Helicopter Horizons, Air Blair, Kavango Air, Ideal Enterprise and Major Blue Air.

At the time Khama issued the Directive, Wilderness Air was reeling from a double whammy: high fuel cost that peaked at US$130 a barrel in mid 2011 and the global economic crisis of 2009 which resulted in reduced demand out of target markets. Following the 2013 presidential directive, Wilderness Air earnings before tax went up by a whopping 44% in 2014 from a loss in 2013.

Khama’s directive turned out to be the gift that keeps on giving and the aviation industry has received a cumulative subsidy of more than P 500 million over the past five years with Wilderness Safaries estimated to have benefited more than P100 million.

Puma Energy Chief Executive Officer Mahube Mpugwa has confirmed payments from the Ministry to his company.

Further investigations by the Sunday Standard reveal that Khama picked the pockets of motorists to subsidise the Botswana aviation industry. To regulate aviation products, government imposed a levy of 13,5 thebe per liter for the products. This means NPF collects P2.5 million per annum from the aviation industry and in turn the Ministry injects P120 million per annum from NPF to cushion the prices of the aviation products. Since the Presidential directive, the NPF has collected about P25 million from the aviation industry and in turn spent more than P500 million to subsidise Wilderness Safaris and other smaller tour operators.

Asked to comment on Khama’s apparent conflict of interest, the former president’s

Senior Private Secretary Brigadier George Tlhalerwa this week referred questions to Government spokesperson Jeff Ramsay.

He said if there was such a decision, the former President would not be in position to respond to questions because the decisions were made while he was still in office. Khama has a financial interest in Lenyanti Concession which is a subsidiary of Wilderness Safaris.

“The former President has declared that he does not have shares in Wilderness Safaris but has shares in a company that Wildness Safaris has shares in,” said Tlhalerwa. Ramsay on the other hand referred this publication to the Ministry of Minerals.

Spokesperson for the Ministry Moreri Moesi said immediate comment was not available from his ministry. It is understood that aviation fuels account for more than 70 percent of the costs of the industry. It is also understood that the national airline Air Botswana fuels mainly in South Africa given its regional outreach and favourable cost of aviation fuel in that country.

As a result, the aviation fuel subsidy only benefits private airline operators dominated by Wilderness Safaris. The NPF is now understood to be running on empty and is humstrung from cushioning motorists from international fuel price fluctuations. A secret letter passed to the Sunday Standard has further revealed that the cash strapped NPF is also failing to pay contractors building fuel infrastructure for the Government storage facilities. The contractors and creditors have already taken the ministry to court demanding payment.

In what amounts to a plea for help, by the Permanent Secretary, she says that the ministry is under “financial strain limiting it to make good payments due to its clients.” Besides the more than P500 million that was spent on subsidising the aviation industry, P250 million from the NPF funds were last year diverted to the Directorate of Intelligence and Security services.

Former Minister, Sadique Kebonang told the public accounts Committee that former president lt gen ian Khama was aware of the decision to divert the NPF funds to the DIS.

The DIS had earlier requested access to the money under a pretext that it would be used to build fuel storage facilities. That money was however diverted to purchase military hardware from Israel.

Even scarier is a communication from Permanent Secretary in the Ministry of Mineral Resources Dr Obakeng to the head of DIS, Isaac Kgosi.

In it Dr Obakeng paints a picture of a country that is vulnerable to international fuel price fluctuations because the National Petroleum Fund is now empty.

With the NPF empty, Dr Obakeng’s biggest concern is that the Fund is not able to fulfill its mandate to creditors and is also not able to stabilize fuel prices.

“I would like to the kindly request you [DIS] to pay back into the NPF the sum of P230 million, which was paid from the NPF into an account of some company called Khulaco on behalf of the Directorate of Intelligence and Security,” writes Obakeng in a savingram dated 26th February 2018.

In that same Savingram, Dr Obakeng expresses concern that Kgosi has not responded to an earlier communication that followed a cabinet decision that had instructed the DIS boss to return the money to NPF.

“I refer to my correspondence dated 23rd November 2017 for which there has been no response from your good office…   I also refer to a Cabinet meeting of the 7th of February,” says the Permanent Secretary. 

She adds that in the absence of money in the NPF and also with no response from DIS, the ministry is not able to make decisions or plan ahead.

“I would appreciate if you can give visibility as to when I should expect the payment.”

The situation, says the permanent secretary has become urgent.

“This has become apparently urgent moreso that the NPF cannot cope with its commitments regarding the stabilization of fuel prices as well as payment for ongoing infrastructure projects such as the expansion of the Francistown fuel storages etc.”

In a separate appeal to the Ministry of Finance, Dr Obakeng makes it clear that a way has to be established to clarify when the DIS will pay back the NPF money.

“While we appreciate your discussion with DIS we will be grateful as to when the repayment by DIS would be credited to NPF. This will help us communicate definite position with our creditors.”

One of the contractors that have taken the ministry of minerals to court is involved in building the fuel storage in Tshele.

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