Wednesday, August 5, 2020

Selibe-Phikwe P1.4 billion done deal collapses

A planned billion pula investment venture that was expected to create 3000 jobs in Selibe Phikwe and give the dying copper mining town a new lease of life has collapsed despite earlier assurances from government officials that it was a done deal.

Eelier this year SPEDU, Botswana Investment and Trade Centre (BITC), Civil Aviation Authority of Botswana (CAAB), Botswana International University of Science and Technology (BIUST), Selebi-Phikwe Town Council, the Ngwato Land Board (NLB) signed a Memorandum of Understanding (MoU) with an American group for the development of a P1.4 billion aviation project.

Sunday Standard has however turned up information that Brite Star Aviation of Texas’ has gone back on its promise a manufacturing and assembly plant in Selebi-Phikwe. In an anti-climax to the excitement that greeted the proposed setting up of the billion Pula plant, there are indications that the company may not set up in the country stoking speculation that Botswana could have been sold a dummy.

While Botswana Development Company (BDC) has declined to share their discussions with Magnus Aircraft- Corporation-another Company owned by Brite Star owner- Imre Katona, Magnus Aircraft Corporation has said that it has no interest in investing in Botswana.

Responding to Sunday Standard enquiries, Brite Star Legal and Transactional Advisor, Advocate Efan Khan said “Brite Star has not firmed up with its intention to set up its Aviation Assembly plant in Botswana yet.”

“Some issues still require to be addressed such as EIA, utility connections etc. If those items will delay Brite Star’s entry into Botswana, Brite Star may consider other countries to locate its Aviation plants since Brite Star has to deliver on confirmed orders for aircraft,” said Khan.

Responding to another inquiry from Sunday Standard, Junior Marketing Manager at Magnus Aircraft Corporation,  Tarany Regina said “thank you for showing interest in our operation. I would like to let you know that we do not have interest for entering into business in Botswana in the near future.”

BDC Head of Corporate Affairs Strategy, Botshwarelo Lebang said “BDC has indeed had business discussions with Magnus. We however cannot divulge details of our discussions as guided by client confidentiality. Please note though that BDC upholds the value of transparency and readily shares information on all our closed deals at the earliest opportune time.”

On reports that Brite is relatively unknown and could be a fly by night Company, Khan described such fears as unfounded.

“Brite Star is JV (joint venture) set up for Botswana operations. The principal owner is Mr Imre Katona who is also owner of Magnus Aircraft and the JV operations in USA and China,” said Khan.  

There are also concerns that Brite Star Aviation does not have approval parts manufacturer certificate and certificate of approval for aircraft maintenance from the Federal Aviation Administration (the civil aviation regulatory authority of the USA) or from Hungary and China where the company claims to have operations.

But Khan insisted that “The JV companies which Brite Star’s Founder Mr Imre Katona operates in Hungary and USA indeed have full FAA and European Certification. Aircrafts manufactured by the Group have German, Hungarian & French Certified EASA Certification as well as FAA (USA) Certification.”

Botswana Investment and Trade Centre (BITC) Director of Corporate Communication Kutlo Moagi said due diligence was still ongoing and the company was still to be subjected to an assessment through BITC’s accreditation process.

This, she said, would be done “only after we have received all the necessary documentation from the company.”

“… conducting due diligence is a process that requires careful analysis of the company background performance including appreciating audited financial flows; and of course, confirming physical location and whether the associated activity is taking place,” she said.

According to Moagi, Magnus first visited Botswana to confirm the information that was presented to its management by BITC officials who had met that company’s management in Kecskemet, Hungary.

She said “During the initial visit of April, the company confirmed their interest in setting up a light manufacturing plant facility for aircrafts in the SPEDU region.”

However, she said “since a lot of emphasis was placed on SPEDU, BITC had not yet received the company business proposal for appraisal and accreditation at the time, with the belief that this will be considered under the SPEDU framework.”

Moagi added that “Discussions to facilitate them are still ongoing to address certain dispensations they have requested which are currently not provided for in our investment frameworks.”

Moagi further stated that “BITC can confirm knowledge of Magnus Aircraft in Kecskemet, Hungary. The Botswana team comprising of SPEDU, BITC also visited Brite Star USA to appreciate the company facilities and plan. Brite Star Aviation Botswana is a new set-up in Botswana which will raise its own funding.”

Selibe Phikwe West Member of Parliament Dithapelo Keorapetse has revealed that he intends to ask a question without notice in Parliament. He said he would ask the relevant minister if he was aware that for a company to manufacture aircraft spares/operate an aircraft maintenance company/operate a flying school, it has to gain approval from the civil aviation authority of the jurisdiction in which the company operates,(in this case Federal Aviation Administration)?

He also wants to know if “the minister is aware that Brite Star Aviation holds no such approval? Nor does it hold such approval from the Hungarian, Chinese and Malaysian Civil aviation authorities? Are these not red flags that should ring alarm bells?”

According to Keorapetse at the MoU signing a certain Imre Katona (CEO of Brite star) said that they would be seeking to raise capital locally, therefore “can the minister inform on what commitments the Government has made in that regard.”

Khan said Brite Star and its associated companies have not requested any funding from BDC or from Botswana government. It is private company with its own assets and funding.

The project was to be near the Selebi-Phikwe airport, and was expected to employ at least 3,000 workers. Priority for employment was to be given to former workers of BCL Mine, who are still jobless, following the mine’s closure last October.

The planed project involves the construction of an aviation manufacturing and assembly plant, safari tourism centre including airport hotel, restaurants, conference and recreation centre as well as a pilot academy and maintenance and service area on a10 hectares plot near the existing Selebi-Phikwe airport.

At the signing of the Memorandum of Understanding in August, BITC acting CEO, Meshack Tshekedi said the project was the result of an investment promotion venture to Europe earlier this year, during which the Hungarians, who were poring over expansion options, were convinced to consider Botswana.

The BITC team brandished the special fiscal incentives announced in March for the SPEDU region, which include five percent corporate tax for the first five years and 10% corporate tax thereafter, as well as zero customs duty on imported raw materials.

“We went to Germany, Czech Republic and Hungary where we met with them,” Tshekedi said. “We confirmed that what they want in Selebi Phikwe is not a pipe-dream, but something that can be brought to fruition. Brite Star will change the face of Phikwe. He was quoted in the media saying, “it has been a tireless journey for us and this MoU is to make sure that the investors are appropriately facilitated across the various services that they may need.” SPEDU CEO, Mokubung Mokubung said the US firm had already secured orders for its products and wished to set up as quickly as possible. He was quoted by the local media saying, “this is historic for the country and it is the first time Botswana will have a venture of this nature,” he said Brite Star president, Imre Katona said funding was being mobilised for the project, while designs would be finalised soon, with a view to getting the projects running as soon as possible. He said the investment pitch by BITC had come when Brite Star was considering an expansion to Kenya or Nigeria.

“I had been talking to partners in Kenya and Nigeria and was about to finalise with some of them, but suddenly BITC showed us the advantages of Botswana,” he said.

“I didn’t know much about Botswana before and they presented the advantages it had.

“It only took me five minutes to decide to come and visit the country.”

He continued: “In the next five years, we will have everything set up as we want.

“It will not be easy, but it will happen.

“Let’s go out and get the shovels and start working”. The Brite Star president revealed that a 10-member delegation from CAAB, SPEDU and the NLB was scheduled to travel to Texas to view the company’s facilities there.

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Sunday Standard August 2 – 8

Digital copy of Sunday Standard issue of August 2 - 8, 2020.