3rd October 2024
Sello Motseta
To ensure security of fuel supply and to get substantial captive volumes, the Government has now increased the volumes imported by Botswana Oil Limited by consolidating volumes through an importation quota of the petroleum products by the National Oil Company.
Petroleum products is regarded as a critical strategic resource and through the importation mandate, Government endeavours to further citizenship economic empowerment and to have direct oversight on this crucial commodity that drives economic activities across the various sectors.
Minister of Minerals and Energy, Lefoko Moagi, said “My Ministry then advised the Government of Botswana through Cabinet on the need to institute reforms on the energy sector. As a result, through the Botswana Energy Regulatory Authority (BERA) a pronouncement was made in September 2023 of the Importation of Petroleum Products Quota Allocation Order, 2023 and Statutory Instrument No. 29 of 2024 – BERA (Petroleum Products) Regulations.”
He said, “This led to the issuance of the Import License to Botswana Oil Limited to import 90% of petroleum products consumed in Botswana, which came into effect on 1st April 2024. The main change in the petroleum industry is that International Oil Marketing companies now buy petroleum products from Botswana Oil instead of importing directly for themselves.”
This led to the issuance of the Import License to Botswana Oil Limited to import 90% of petroleum products consumed in Botswana, which came into effect on 1st April 2024. The main change in the petroleum industry is that International Oil Marketing companies now buy petroleum products from Botswana Oil instead of importing directly for themselves.
The remaining 10% has been reserved for citizen owned companies who already had operating licences to import petroleum products, and their licenses allow them to import for their own consumption and distribution to their own retail networks and notwithstanding the 10%, there is no restriction on the volumes they can import for their requirements.
The initiative was set up under the Companies Act with a mandate to ensure security and efficiency of supply and primary distribution of petroleum products in Botswana; to manage strategic reserve facilities and strategic stocks. And most importantly to facilitate meaningful participation of citizens in the petroleum value chain.
The establishment of Botswana Oil outpaced the enactment of enabling legislation hence Botswana Oil started with very low volumes under a Willing-Buyer-Willing-Seller model. Under this model the Government could not guarantee the security of fuel supply in the country and achieve the much-needed transformation of the sector.
The Ministry of Minerals and Energy through the Department of Energy has transferred assets such as the storage facilities at the Gaborone and Francistown Depots to Botswana Oil not only to strengthen the company’s balance sheet, but also to capacitate the company to implement the security of fuel strategy for the Country.
The strategy is anchored on the importation model to provide captive volumes as well as the development of critical and strategic petroleum infrastructure to mitigate fuel shortages that may adversely impact our economy.
“Our Government acknowledges the contribution the International Oil Companies have made to the development and growth of the petroleum industry since inception. These companies brought in their expertise and invested in skills development and capacity building of citizens they employ across the spectrum of the industry,” said Moagi.
He said, “They will continue to be key stakeholders as they play a vital role in the industry through the distribution of the petroleum products to their retail networks to serve both the commercial and consumer sectors.”
According to officials, Vision 2036 espouses the Sustainable Environment Pillar recognizing Energy Security as one of the critical components essential for social and economic development.
“I am pleased to inform you that Botswana Oil has transformed its business operations from many years of making losses to impressive financial and overall business performance. For the year 2022-2023, the company grew its revenue to P2,6 billion, with volumes rising to 187million litres supplied in that financial year and a profit of P99 million,” said Moagi.
He said, “Furthermore, for the financial year ended March 2024, Botswana Oil Limited closed the year with P3,083 billion in revenue and a profit of P69 million. The reduction in profit was attributed to supply disruptions during the year and further investments in mobilising resources for the implementation of the 90% Import Mandate.”
With the implementation of the 90% Import Mandate in the current financial year, officials anticipate that in the near future Botswana Oil Limited will grow its revenues to approximately P15 billion with profits ranging between P400 million and P500 million.
The Ministry of Minerals and Energy therefore expects dividends to be declared to the Government in future to be much more than the P10million declared today.
Botswana Oil is also very proud of its Citizen economic empowerment programme(CEEP) including value chain development, entrepreneurship and enterprise development, supplier development and performance management, capacity development and building as well as procurement to stimulate, nurture, support and empower citizen companies to grow into sustainable businesses.
“My Ministry and I are very proud that in 2022, Botswana Oil Limited and the Debswana Mining Company collaborated on a landmark CEEP partnership. This partnership has facilitated four citizen transporters to deliver petroleum products to the Jwaneng, Orapa, Letlhakane and Damtshaa mines and it is worth P8 billion to be delivered over a period of five years,” said Moagi.
He said, “The transporters being API, Filano, Skybridge and Guildhall successfully completed the Sasol Transporters accreditation process which enables them to uplift petroleum products from Sasol and to deliver to Botswana and any country within the Southern African region.”
These transporters form part of the Botswana Oil transport network which started with around twenty citizen owned trucks operated by around 7 companies during the 2021/ 22 financial year.
Botswana Oil has spent more than P345 million on citizen companies contracted for the transportation of petroleum products over the past three years.
During the current financial year of 2024/ 25, Botswana Oil has so far spent close to P100 million and expected to spend P300 million by end of the year, having supported up to 16 (sixteen) citizen transporters with a fleet of 115 trucks.
It is planned that in the next twelve (12) to twenty-four (24) months, the number of trucks owned by citizens would have increased to more than 200 as BOL are in the process of engaging more citizen transporters on long term contracts so that they can increase their capacity.
This increase in the number of trucks has a multiplier effect in the creation of employment for the drivers, maintenance services, truck staging facilities and other activities related to the transportation of petroleum products.
This was not without its challenges because the country experienced a number of challenges which ranged from security of supply risks, reliance on a single route of supply, limited participation of locals in the sector as well supply disruptions from time to time.
As part of building the requisite capacity towards delivering the import mandate, Botswana Oil had established a supply strategy that included diversifying routes of supply from the main primary route of supply and had started engagements with major refineries, national oil companies and traders in Mozambique and Namibia to reduce the risk of sourcing from one country.
Botswana Oil Chief Executive Officer, Meshack Tshekedi, said “Prior to the establishment of the National Oil Company, Government had instituted a number of studies to benchmark and establish the best approach to resolving some of the challenges and most of the studies recommended anchoring security of supply through structured control of imports of petroleum products. This led to the Import License business model of consolidation of volumes consumed in the country thereby creating captive business to then be used to transform the sector.
He said, “Therefore, the 90% Import Mandate comes at a time when the unsustainable willing buyer-willing seller business model had run its course and was not going to deliver the desired results as quickly as we wished
We are grateful that throughout the early days, we had all key industry players collaborating with us right from the onset until the import license was issued. Often times in business, a major shift in operations requires significant acumen and agility to transition while the daily business activities also need to be actioned.
According to officials as the business evolved, it caused some level of resistance, risks and challenges. Just after it started with the implementation, one of the significant challenges that affected the entire industry was the shortage of the Unleaded Petrol (ULP 93) due to the closure of the NATREF Refinery for their annual maintenance.
This led to supply challenges and put pressure on the availability of ULP 95 as consumers for ULP 93 started switching to ULP 95. This created pressure on the availability of Unleaded Petrol leading to some panic buying that resulted in some dry sites over a few days across the country.
“As a result, an emergency crisis management plans were instituted for business continuity, with imports from alternative routes expedited to ensure continuity of supply. This experience tested our responsiveness, resilience and tenacity. The unity and cohesiveness of our collaboration with the industry, the regulator and the Ministry was strengthened and we collectively worked together as an industry until we successfully stabilised the supply of petroleum products. Though the supply of ULP93 cannot be guaranteed in the medium to long term,” said Tshekedi.
