Saturday, October 24, 2020

Lights flicker out for BPC as BCL ghost rears

For now at least, the Botswana Power Corporation (BPC) is not revealing anything but Sunday Standard learns from good sources that for as long as the BCL Mine remains closed, the Corporation will lose about P150 million a month.

Having been supplying the mine with 65 megawatts per hour, the figure is said to have dropped to just 10 megawatts per hour and might go even lower depending on what more operations are whittled down.

BCL consumes about 20 percent of total electricity usage in Botswana or 43 percent of BPC’s power generation.

This comes at a time when BPC is technically bankrupt with a deficit of P2, 70 billion. A recent audit by Deloitte & Touch├® has revealed that “the corporation’s current liabilities exceeded its current assets by P2.70 billion.”
The BPC position is further aggravated by its contingent liabilities. The Auditors revealed that “the Corporation was exposed to a number of quantified and unquantified claims by a contractor in relation to implementation of Morupule B, which the board and management believed were less than the counter claims against the contractor.”

We sought official illumination of the BCL-BPC business relationship but BPC’s Manager of Marketing and Communications, Dineo Seleke, was adamant that the Corporation could not disclose financial information relating to a client.

“The Corporation is not in a position to communicate the financial position of its stakeholders with the public. Matters affecting BCL and BPC are handled internally through appropriate structures,” she said.

However, even without official input from BPC, the stated figure would be in the ballpark because it resulted from the calculations of a source that is familiar with the Corporation’s billing system as well as its commercial relationship with BCL.

The closure of the Selebi Phikwe mine continues to send shockwaves throughout the national economy because BCL was hardwired into it. Another parastatal that may be crippled by the mine closure is Water Utilities Corporation (WUC) which is also technically insolvent.

Official figures show that in the past three years, BPC and WUC raked in more than P3.4 billion from BCL. WUC spokesperson, Matida Mmipi, said while they did not anticipate any job losses, the closure of the mine was going to affect their profit margins.

“BCL consumes 16 million litres of water every month and not having them as our customer is likely to impact on our profitability,” she said.

WUC is in a worse position and recently could not raise enough money to pay staff salaries. It was also audited by Delloitte & Touch├® which found that “the working capital position of the Corporation as at March 31, 2015 showed current assets of P271.50 million and current liabilities of P493.01 million, resulting in a net current position of P221.51 million.”

The audit report further states that “the Corporation had not complied with Section 19 of the Water Utilities Corporation Act which requires the Corporation to conduct its affairs on sound commercial lines and to produce a net operating income by which a reasonable return can be measured.” 
This is audit officialese for a truism that the plain-speaking will summarise in just five simple words ÔÇô Water Utilities Corporation is bankrupt.

The other parastatal organisation that will feel the BCL impact is the Botswana Railways (BR) which has not turned healthy profits in a really long time. Long having transported copper from the mine to markets abroad, BR finds itself stuck with a special railway line it will use for little else for as long as the mine remains closed. The mine was the town and region’s lifeblood and with its closure, some fear that Selebi Phikwe may turn into a ghost town prematurely. There has always been understanding that past a point where the copper is mined out, BCL will lose its economic importance to both the town and region.

To forestall the ghost town spectre, the government has established the Selebi Phikwe Economic Diversification Unit (SPEDU) to keep the town and region afloat past the copper mining. The indefinite closure of the mine, which is largely a direct result of severe depression in the global metals market, happens as SPEDU is just getting in stride in its implementation of its economic diversification programmes.

Hospitality and tourism establishments in the town have indicated that with the mine closing, it will be extremely difficult, if not downright impossible, to keep their operations running.

Late last week, the president of the Botswana Hotel Catering, Travel and Tourism Workers Union, Phologo Ntswetswe, said that his office had been inundated with frantic calls from members in Selebi Phikwe who are gravely worried about the security of their jobs.

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