Cash-strapped Botswana Power Cooperation (BPC) has received P148million as the first tranche of a P500 million government rescue package for the power entity, The Business Weekly & Review has established.
After months of speculation that BPC had squandered all its funds and was at a point of collapse, the power utility has opened up to this publication on its struggles for much-needed cash and power in its operations.
Responding to The Business Weekly & Review’s enquiry into the matter, BPC Manager Marketing and Communications, Dineo Seleke, said by email: “The allegation is unfounded. BPC wishes to clarify that at the time of speculation around the P500 million fund by the government, the process to release funds to BPC was in progress.”
“The Corporation has to-date received the first tranche of the P500million amounting to P148million which was received on 19 June 2020. This amount is being used to supplement local power generation fuel (coal) costs as well as power importation.”
In earlier editions, this publication reported that May salaries were postponed as BPC was cash-strapped. A letter to employees seen by this reporter dated 22 May 2020 sought to explain the postponement of salaries. “The postponement is mainly on the basis that the Corporation is currently experiencing cash flow challenges as a result of the COVID-19 pandemic, hence proving difficult to meet the deadline.” the letter said.
Quizzed about the cash flow crisis, Seleke answered: “Like most businesses, during the COVID-19 pandemic period, BPC experienced (a) sales revenue decline due to the reduced consumption of electricity by major businesses, e.g. mines, commercial customers. This reduced consumption (and) the cash inflow profile was adversely affected.”
She said BPC was working round the clock to remedy the situation. “However, BPC is implementing cost management strategies to ensure business continuity.”
Asked if BPC would be able to pay staff salaries for the remainder of the year, Seleke responded: “BPC has always met its obligations to pay salaries within the month they fall due. The Corporation will continue to honour this obligation. Meanwhile, the 48hrs extension of payment of June 2020 salaries was a cash flow management measure to address the COVID-19 impact on cash flow.”
Over the years BPC has been listed alongside parastatals that gobble up government funds (subsidy) because they are operationally inefficient. This has since prompted new finance minister Dr Thapelo Matsheka to intervene. In his maiden budget speech earlier this year, Matsheka said he would cut funding for parastatals and review the mandates of some.
Becuase of failure of Morupule B project, a plant that is under endless rehabilitation with no sign of resuscitation, BPC still looks to South Africa, Namibia and Mozambique for power imports.
“As per the latest audited financials of financial year 2018/19, the total cost of power imports was at P861million,” Seleke has said.