The newly established Botswana Energy Regulatory Authority (BERA) will take over the licensing of petroleum sector activities which has previously been done at the Ministry of Investment, Trade and Industry under the 2003 Trade Act.
Addressing Journalists recently, BERA Executive Director Petroleum, Kenneth Kerekang, said it includes licensing of manufacturers, which was done by the Department of Industrial Affairs, licensing of importers, wholesalers and distributors which were taken care of by the Department of International Trade as well as the licensing of petrol service stations.
“All petroleum licensing activities shall migrate to BERA, except licensing of fuel transporters. However, BERA will continue to collaborate closely with Department of Road Transport and Safety and Botswana Bureau of Standards for the development of relevant standards and codes,” said Kerekang.
Asked on the country fuel demand, he stated that currently the overall national demand for petroleum products (petrol, diesel and paraffin) stands at 1.2 billion litres per annum. He added that national consumption pattern for South (Gaborone) is at 57 percent, while for North East (Francistown) is at 35 percent and North West (Ghanzi and Maun) is 8 percent. Kerekang said that more than 90 percent of Botswana petroleum products requirements including Liquefied Petroleum Gas (LPG) are imported readily refined mainly through South Africa. He said that the supply of the products is done 40 percent by rail and 60 percent by road. “Consumption of the liquefied Petroleum Gas (LPG) currently stands at just less than 15,000 metric tonnes per annum. There are some challenges being experienced with the supply and pricing of LPG for the local market,” he said.
“The prices of petroleum products are computed on the basis of a formula known as the Basic Fuel Pricing Methodology (BFP),” he said. He added that BFP is based on the import parity pricing principle, that is, what would cost an importer to buy the fuel from an international market, transport fee of the product from the refinery, insurance of the product against losses at sea, and the landing of the product on the borders of Botswana.
He also spoke of the Department of Energy (DoE) subscribing to international pricing agencies so as to get access to pricing information that is used in the analysis (Platts, Free on Board (FOB) prices) adding that these are captured on a daily basis. He mentioned London Tankers, which he said average freight rates are updated on monthly basis as well as World Scale Association for tariffs and demurrage rates adding that these are yearly rates.
“BERA is inundated with reports on mishandling and smuggling of fuel out of the country. It is reported that consumers and other informal fuel resellers purchase fuel from various fuel filling points with containers not recommended for safe handling and transportation of fuel,” said Kerekang.
Kerekang observed that the mishandling of fuel is particularly rife in the northern part of the country such as in Francistown, Kasane and the surrounding areas. He added that it has also been noted that the fuel being smuggled outside the country is resold in the neighboring countries that are to the north of Botswana.