Ambitious Botswana Oil Limited walks the talk
As a key strategic player in the national economy, Botswana Oil Limited continues to position itself at a vantage point, beneficial to the country’s ambition of self- reliance on petroleum supply. Botswana Guardian’s KOOBONYE RAMOKOPELWA interviews Botswana Oil Limited CEO, Meshack Tshekedi who lays out their roadmap as well as their achievements so far
Botswana Guardian: What major strategic initiatives has Botswana Oil Limited achieved since your appointment last year?
Meshack Tshekedi: Under my leadership, Botswana Oil Limited has made significant progress in some of the key strategic issues which include: a. Business Model – I have been able to motivate and obtain Cabinet approval for the company Business Model in September 2020. This is a crucial milestone for the company as we have had to operate under the difficult willing- buyer, willing- seller environment which was never intended to last this long. b. Fuel Supply Disruptions – BOL continuously monitors the events that can impact negatively on the supply situation to the country and puts measures in place to avert supply disruptions or minimises impact. For example, During the June and July 2020 fuel crisis, BOL managed to rump up supply from very little confirmed demand at the beginning of June to supply an average of 30percent of national consumption during that period. During the same period, BOL had contracted the entire fleet of citizen transporters available. c. Alternative Routes of Supply – Most of Botswana’s fuel is sourced from South Africa and is routed via South Africa. I have fostered the operationalised use of alternative routes of supply in the past year than at any other time. The continuous use of these routes has allowed BOL to optimise and progressively reduce the associated additional costs of sourcing from those routes to the levels unheard of before in this country. d. Coal- to- Liquid’s project - The Government through BOL is pursuing coal beneficiation through conversion of Coal- to- Liquid to ensure Botswana’s fuel selfsufficiency, diversify the economy and create employment. The project Feasibility Study was completed at the end of 2020 and the Bankable Feasibility Study commenced in December 2020 and is expected to take between 12 and 18 months. The project will be implemented
through a Public Private Partnership ( PPP) model in line with the Government’s PPP implementation framework. e. Tshele Hills – the strategic Fuel Storage Facility. BOL engaged the services of a Transaction Advisor ( TA) in line with the requirements of the Public Private Partnership Implementation Framework in January 2021. The role of the TA is to package the project for private sector participation and the TA phase is expected to end in June 2021, after which the project will go to procurement of a private partner through a tender process. f. Citizen Facilitation – as part of the facilitation of citizen companies and lowering barriers to entry into the oil industry, BOL has worked with key suppliers out of South Africa to register local transporters in their data and allow them to load for export. From time immemorial, citizen transporters have not been able to load from South African Depots due to failure to meet requirements for loading in those depots. Following extensive consultation with the South African suppliers, training sessions were held to equip local transporters with the technical capability to meet requirements of loading depot in South Africa. This was followed by an Expression of Interest that BOL floated, inviting interested local transporters to put forward their intention to take advantage of the opportunity to be registered. The initiative culminated in at least two citizen companies registering with the said suppliers after meeting the set requirements. Botswana Guardian: What has been the challenges that the company encountered in driving its strategic objectives and how have you managed to maneuverer around them?
Tshekedi: BOL was established to ensure the security of supply of petroleum products in the country, facilitate meaningful participation of citizens in the oil and gas sector, amongst others. However, the delay in the promulgation of enabling legislation has resulted in the company not able to deliver on its mandate as intended. That notwithstanding, the company has created a niche under a willing- buy, willing- seller environment to drive some of its strategic objectives and deliver on key aspects of its mandate to the extent that it is possible under the circumstances.
Botswana Guardian: Provide us with a detailed update on your various energy projects?
Tshekedi: In addition to the projects elaborated under 1 d. and e. above, this year, the Government has approved funds for BOL to progress the Francistown Depot Expansion and to start the development of the Ghanzi Depot: a. Francistown Depot Expansion Project – the project aimed at expanding the Francistown Depot by an additional 60 million liters was suspended in September 2017 due to funding challenges at a point when engineering designs were complete. However, funds will be availed in the current financial year to progress some crucial aspects of the project in a phased- out manner. b. Ghanzi – this project is aimed at enhancing the security of petroleum products supply into the country and serve the western part of the country through product sourced from the alternative route of Namibia. The project will also get some of funding this financial period that will go towards the project initiation phase. It is to be noted that last year BOL completed the Environmental Impact Assessment of the project as well as some preliminary site works like fencing.
Botswana Guardian: How has the market specifically responded to your coal to liquids tender and what is the latest from it?
Tshekedi: The response was satisfactory. From eleven ( 11) companies that responded to the Expression of Interest, two companies were initially prequalified for the next procurement stage and as the process progressed, one company fell off. Currently, BOL is working with the remaining company on the development of a Bankable Feasibility Study through the issuance of request for proposal, which the company will respond to by December 2021.
Botswana Guardian: How important is Private Public Partnerships to a profit- driven organisation like Botswana Oil Limited?
Tshekedi: PPPs are important for the country in terms of the strategic and operational choices they offer to the Government. Accessing private sector financing will ensure that we are able to advance our objectives and not strain the country’s fiscus especially given the current economic challenges that the whole world is facing. PPP is also expected to introduce private sector technology and innovation in providing better security of supply for the country through improved operational efficiency. Furthermore, PPP inherently incentivises private sector to deliver projects on time and within budget as well as extracts long- term value- for- money for the Government through appropriate risk transfer to the private sector over the life of the project.
• Botswana Oil measures the viability of its projects, including PPP projects, and as such are relevant and complimentary to our business model.
• As BOL, we believe PPPs are a contracting model of the future for any major project undertakings in Botswana and we have, through time, matured our in- house capability to execute PPP projects.
Botswana Guardian: Two years ago, Botswana Energy Regulatory Authority ( BERA) rejected your application to have an exclusivity on the importation of petroleum products in the country. Are you still pushing for this license and what is the regulatory saying?
Tshekedi: The challenges the country is facing that BOL set out to address through an exclusive import licence persist even to this day. In fact, as we have all witnessed last year in June, July and earlier this year, the situation continues to deteriorate as the country takes long to have meaningful influence on the importation of a strategic commodity that drives the economy and also gets involved in decisions that affect how petroleum products flow to Botswana. We have continued to engage with all key stakeholders on our mandate and the solutions for the security of supply for the country as well as the best approaches around participation of citizens in the oil and gas sector. As indicated under 1. a, these engagements have resulted with the Cabinet approving our business model which is underpinned by how we believe the challenges that the country is facing should be addressed. Subsequently, we have approached the regulator with a new and revised application in November 2020 and we believe the matter will be brought to bed soon.
Botswana Guardian: What major strategic partnerships is Botswana Oil Limited pushing to ensure the country at all times has petroleum products?
Tshekedi: To ensure that the country does not run dry, BOL has signed cooperation agreements with state- owned entities such as Petroleum Oil and Gas Corporation of South Africa, Transnet International Holdings, Petróleos de Moçambique, National Oil Infrastructure Company of Zimbabwe, and National Petroleum Corporation of Namibia in the region. BOL further has established partnerships with refineries and oil producing countries that are aimed at ensuring that there is security of petroleum products for Botswana.
Botswana Guardian: How has your company helped citizen owned companies in their quest to break into the cutthroat petroleum sector?
Tshekedi: BOL developed a citizen companies facilitation framework that is underpinned by four pillars of Preferential Procurement, Capacity building, Supplier Development and Enterprise Development.
The following are some of the past Citizen empowerment initiatives that BOL has undertaken to help citizen owned companies to make a mark in the industry:
• Engaged all the available citizen trucks ( 30+) in the country during 2020 fuel crises
• Worked with Botswana Railways to resolve some of the challenges impeding use of rail, resulting in BOL becoming the biggest consumer of bulk fuel rail services.
• Worked with suppliers in South Africa to cause accreditation of local and citizen transports to enable them to load out of their facilities.
• Continues to conduct targeted oil industry capacity building trainings to citizen companies and other public institutions that consume fuel in bulk. The trainings include oil industry fundamentals, petroleum pricing, bulk fuel transport and logistics, Health, Safety, Security and Environment. Eleven ( 11) such engagements were held in the past year alone.
• Working with financial institutions and institutional customers to resolve the working capital challenges for citizen companies, including entering into cession agreements to guarantee supply to customers of citizen companies like councils and parastatals.
• Offering storage and rental support to citizen companies to enable them to compete for tenders in the commercial space.
• It is to be noted however that the current willing- buyer, willing- seller environment under which BOL operates with no offtake commitments from the local industry players, inhibits BOL’s ability to implement other aspects of its citizen empowerment strategy.
Botswana Guardian: At what point will Botswana Oil Limited float shares on the Botswana Stock Exchange?
Tshekedi: Listing with the stock exchange remains BOL’s midterm objective. Once the issues relating to BOL’s business model have been resolved, the idea would be to run and operate for a few years at an acceptable level of profitability after which the company will be in a good position to list.