Wednesday, May 22, 2024

Privatisation staggers on

Following the Public Enterprises Evaluation and Privatisation Agency (PEEPA)’s media briefing in January 2007 on the status of current privatisation transactions, which PEEPA has been advising Government on, PEEPA wishes to issue an update on a number of privatisation transactions.

Negotiations with SA Airlink regarding the privatisation of air transport services have been concluded. SA Airlink’s proposal includes the creation of a new national carrier to be called Botswana Airlink, a joint venture between the Government (majority shareholder) and SA Airlink that will be followed by the closure of Air Botswana, if approved by Government. The different organs of Government are currently considering a draft Cabinet Memorandum for consultation purposes before it is submitted to Cabinet for decision during the course of this month.

The privatisation of GEMVAS which entails the outsourcing of the entire administrative functions of the Scheme and the sale of the insurance portfolio (the Guaranteed Loans Insurance Fund) is expected to be completed by the end of the year.
The due diligence assessment of the Scheme and the fund as well as the valuation of the Fund have been completed. A Cabinet Memorandum seeking approval of the transaction structure has been prepared and is currently circulating within the different Government departments for consultation purposes, prior to submission to Cabinet for a decision.

The financing package for BVI is expected to be finalised soon while construction of the vaccine plant expansion has already begun. The privatisation of BVI envisages the raising of between P100 million to P145 million of financing through loans, a bond issue and through the issuance of convertible preference shares.

The ability of the preference shareholders to secure rights to their shares into ordinary shares on their volition constitutes a privatisation in that Government’s shareholding will be diluted when the conversion is made.

As PEEPA indicated during the January media briefing, the privatisation of BTC has to be preceded by the appointment of a Transaction Advisor (TA). The role of the advisor includes the structuring of the transaction, undertaking due diligence and carrying out a detailed valuation of BTC, drafting Information memorandum or prospectus, marketing the transaction, developing bidding documents, carrying out bid evaluations, undertaking due diligence of bidders, drafting sale and purchase agreements and ensuring transaction closure.

Following the receipt of legal advice, PEEPA advised the Minister of Communications Science and Technology that the procurement process was deficient in that it did not strictly comply with the Public Procurement and Asset Disposal Act because the tender documents had not been approved by the Public Procurement and Asset Disposal Board (PPADB).

In order to stay close to the original timescale, the tendering process had to be nullified and a fresh procedure instituted at the earliest possible opportunity. The Minister concurred with PEEPA’s advice as appropriate and, accordingly, the procurement process for the transaction advisor has been set aside. A fresh procedure will be announced in due course.

While there was an issue regarding a conflict or potential conflict of interest with one or more of the tenders, the cancellation of the BTC tender for the advisory services is solely due to the need to ensure strict compliance with the PPADB procedures.

Concerning the privatisation of the National Development Bank (NDB), consultations with the management and shareholder are ongoing on a number of issues, which include the timetable for the development of the privatisation strategy. This involves the development of a strategy for privatising NDB as a stand alone entity separate from the Botswana Savings Bank as well as examining different options for privatising NDB.

Construction of the P98 million offices for the Office of the Ombudsman and the Lands Tribunal which is being done using the Public Private Partnership approach is already underway. The project, which involves the provision of partially serviced office accommodation, is expected to take 18 months to complete.

A number of new PPP projects are underway which include the building of the Botswana International University of Science and Technology (BIUST). The Transaction Advisor for BIUST has been appointed and is due to start work on the preparation of a feasibility study. The media will be briefed on progress of these projects at the appropriate time.
Two outsourcing projects have been completed with the advice and support of PEEPA. These are the outsourcing of catering services at the Botswana Police College in Otse and the Botswana Institute of Administration and Commerce.

PEEPA is also currently advising and supporting a number of Government institutions to outsource some of their services to private sector service providers. These include catering services by the Botswana College of Agriculture, uplifting of fuel from private filling stations for Central Transport Organisation vehicles and debt collection of student loans for the Department of Student Placement and Welfare in the Ministry of Education. The projects are earmarked for completion during the current financial year.

As has been stated before, the role of PEEPA in these privatisation projects is advisory with the exception of AB and BTC transactions where PEEPA has been mandated to implement the transactions on behalf of client Ministries.

*Norman Patlakwe is Corporate Communications Manager at PEEPA

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