The National Petroleum Fund (NPF) embezzlement scandal is much bigger than initially reported and its fall out is snow balling into a national emergency that threatens to ruin Botswana’s credit rating ÔÇô an official report passed to the Sunday Standard has revealed.
The report further reveals that government is facing a class action law suit from oil companies and contractors building fuel infrastructure storage facilities because the NPF does not have money to pay them for services rendered. Motorists will also bear the brunt of the NPF embezzlement as government intends to embark on a “series of fuel increases”, it has emerged.
The fresh revelations are contained in the report dated 26 June from the Ministry of Mineral Resources, Green Technology and Energy Security submitted to the Estimate Parliamentary Committee.
The report states that there has been “misappropriation from the National Petroleum Fund”. According to the report, between “June 2016 and September 2917, the Fund experienced some additional challenges where by some funds from the National Fund were misappropriated.”
The report states that “P250 million, P60 million and some funds in the order of more than P30 million were misappropriated through various means which are still a subject of the ongoing investigations by the Government law enforcement agencies.”
According to the report, “Indeed the misappropriation has over compounded the direness of the situation for the Fund not meeting its obligations and hence the need for assistance from other Government funding avenues.”
The report says, given the current level of debts to the local oil industry and the outstanding value of contracts for the Tshele Hill fuel storage project, it is projected that the settlement would spill over to the next development plan; NDP 12.
The Ministry of Mineral Resources, Green Technology and Energy Security has submitted a P520 million supplementary budget request to the Parliament Finance Committee for the current financial year; 2018/19.
“Henceforth, the critical importance of establishing a programme under the domestic development budget that would provide interim support to both the funding of the Tshele Hills and other key oil gas infrastructure projects together with settlement of the cumulative slate,” the report says.
The report states that “It is important to note that the current price under-recoveries for the three products; petrol, diesel and paraffin are quite high that they cannot be settled through once-off adjustment or even a sequence or regular adjustments or a series of adjustments would a high inflationary effect which could even be detrimental to the economy.”
The report shows that as at 22th June, NPF funds stood at P624 million; P463 million is held with Bank of Botswana and P160 million held as investments by Kgori Capital. In May, 2018, the report says, Government transferred some of the “funds in the order of P100 million “from an account held by Botswana Oil for substantive recapitalisation of the company which is wholly owned by the Government of into NPF.”
A further P430 was transferred from the Road Collections Levy Fund into the NPF in June 2018.
The report reveals that as at 31th June, Government owed local oil companies more than P1 billion and “it has already committed to pay part of the outstanding cumulative slate deficit for period up to November 2017 of about P660 million.”
Therefore, the report says, “even after the cumulative slate settlement for period up to November 2017, Government would still be owing the Oil industry more than P378 million.”
The report states that the Tshele Hill fuel facility project has some outstanding payment certificates for contractors and engineers standing to the tune of P82 million against the current value of contracts of P437 million.
“It is also important to note that a lot of the work for the Tshele Hills project had not yet started has been deferred to the mid-term review of the NDP 11 as a way of managing and mitigating the current financial position of the fund,” the report says.
The Ministry of Mineral Resources reiterated that it had submitted a supplementary budget request for P520 for the current financial year; 2018/19. The objective of this budget request “is to secure funds that can assist government in the short term to defray payment claims for outstanding payment claims for P220 million and the accumulative slate claims of P300 million.”
The report says “It is further requested that a new programme and vote be introduced and established under the National Development Plan 11 called National Oil Supply Security which will host funds requested over the subsequent financial years of the NDP.”
If nothing is done, (approval of supplementary request) the report says, “Government will incur charges from contractors and engineers and eventually face litigation. The Oil companies owned are also at the verge of litigating Government for cumulative slate settlement. This could also deteriorate the current good image of the Government and ruin the good record of the country’s financial and economic credibility.”