03 Apr 2016

Parliament has on Thursday authorised the issuance of a government guarantee for a US$100 million loan to be given to BCL Limited by Barclays Bank Botswana and ABSA Bank Limited.

The request for a government guarantee was made pursuant to Section 22 of the Public Finance Management Act, which provides that the minister may issue a guarantee on account of an entity in which government is a shareholder subject to prior authorisation or subsequent authorisation or ratification by the National Assembly.

Presenting an urgent motion before Parliament, Minister of Finance and Development Planning, Mr Kenneth Matambo said the BCL Group, which comprises BCL Limited and Tati Nickel Mining Company, makes a significant contribution to the local economy, employing about 6 000 people directly and over 10 000 indirectly through the engagement of outsourced service providers.

He said the BCL Group was currently facing serious liquidity problems as a result of poor trading conditions caused by the prevailing depressed commodity prices which are anticipated to continue until 2018.

Mr Matambo said the BCL Group had been aggressively pursuing the implementation of the restructuring project, which encompassed a long term strategy, whose thrust is to improve business efficiency and create an enabling environment that would result in long term sustainability.

The Group also embarked on the acquisition of Norilsk Nikel Africa, which owns 50 per cent of Nkomati Mine and 85 per cent of Tati Nikel Mine and smelter refurbishment amongst other key projects.

The finance minister said the BCL Group had intended to finance the transaction through a combination of debt and cash reverses; however, the Group’s financial performance has deteriorated over time due to the low commodity prices.

He added that the Ministry of Minerals, Energy and Water Resources and BCL Board were currently undertaking an extensive review of BCL Group’s operations and are expected to make medium to long term recommendations about the future direction of the Group.

Therefore, Mr Matambo said the US$100 million loan facility was intended to serve as an interim measure to avoid disruption to the business.

He said the facility’s maturity period was 15 months and the guarantee would cover the same period.

Meanwhile, debating the authorisation, Mmadinare MP, Mr Kefentse Mzwinila said the conditions of the loan must be specified, noting that it should not only be about saving the jobs at BCL.

‘’It is high time something is done about protecting the health of Mmadinare people who are affected by pollution from the BCL smelter,” Mr Mzwinila said, adding that as a BCL shareholder, government had the responsibility to protect the health of the said people.

He therefore suggested that one of the conditions of the loan be made final that BCL invest where it has damaged by building a hospital in the Mmadinare constituency.

Sefhare-Ramokgonami MP Ms Dorcus Makgatho supported the authorisation of the guarantee, saying the request was backed by a long term and medium term strategy.

She however noted that US$100 was a lot of money, as such, the Group must deliver whatever they had promised.

Meanwhile, Gaborone North MP, Mr Haskins Nkaigwa was skeptical about the whole guarantee issue, saying he did not think there was any bank that would like to fund a dying company.

He said Barclays Bank was owed by BCL; hence government wanted to raise funds for the bank by this authorisation.

Mr Nkaigwa however suggested that government could invite investors from outside that can help situations such as that of the BCL instead of always using government funds to rescue situations, citing BMC as a similar case. Ends