10 Feb 2019

Botswana Power Corporation (BPC) has successfully concluded the first stage of its restructuring journey, dubbed: “MASA 2020,’’ which started at the beginning of 2017.

A press statement from BPC says the five-year restructuring programme was divided into two years of restructuring and three years of process re-engineering and customer service improvement.

It says the programme was meant to regain BPC’s financial stability and reduce government subsidy to zero within five years, provide secure power to customers and connect more people to the grid.

The corporation, the release says, has successfully completed the two year restructuring and retrenchment exercise, and that  for the first time in 15 years, the corporation has received a non-going concern certificate from its auditors PWC Botswana.

Its accumulated profit has increased by P2 billion, and government tariff subsidy was reduced from P1.6 billion to P 800 million, making a reduction of P867 million.

“This is a clear indication that BPC is achieving its financial independence objective as per the MASA 2020 transformation strategy,” says the release, noting  earnings before interest, taxes, depreciation and amortisation increased from minus 33 per cent to plus 16 per cent.

“The gearing ratio, which compares the company’s equity to the company’s fund borrowed, improved from 95 per cent to 51 per cent slightly outside the global standard powering Botswana towards prosperity of between 25 per cent and 50 per cent.

The current liquidity ratio that measures a company’s ability to pay short-term and long-term obligations improved from 31 per cent to 59 per cent.”

From all these financial gains, the release says, P250 million emanated from the latest tariff increase, whereas most of the improvements are a result of internal factors such as increasing the Morupule B Power Station (MBPS) maintenance staff, and up-skilling and training its operational staff to increase availability from 67 per cent in September 2016 to 74 per cent in January 2019.

“This significant change led to import reduction of power to P880 million, which reduced the required consumption of imported power from 55 percent down to 12 per cent,” says the release.

Furthermore, while the production cost for MBPS stayed stable over the years with approximately 50 Thebe /kWh, the release states that the average costs per electricity unit also went down from 131.12 Thebe / kWh to 108.03 kWh, which is a cost reduction of 17.6 per cent.

Other improvements that resulted from internal factors, according to the release, is increasing sales to the non-mining sector from 2 482 GWh to 2 534 GWh, which is an increase of 2 per cent, with consumption of the mining sector declining from 828 GWh to 679 GWh  in the same period.

“As it is BPC’s strategic pillar to connect the whole country to the grid, in the recent months the corporation connected 13 per cent more customers to the grid, hence increasing its customer base to 463 000,” says the release.

Additionally, it says in 2017/18, BPC connected 24 new villages to its distribution network and extended it in 69 villages.

BPC is also proud to announce that access to electricity has increased from 69 per cent in 2016 to 81 per cent in 2019.

The corporation completed its retrenchment and re-organisational exercise in which approximately 530 people left the organisation on a voluntary basis.

These changes are driven by the corporation’s objective to outsource services to the private sector to increase efficiency, particularly roles that are not core business such as cleaners, security guards and vehicle fleet maintenance.

On staff rationalisation, the release states that the corporation also took a decision to invest in areas which are lacking through training of staff and capacity building, adding that to date, the corporation has got 140 more employees than at the beginning of the restructuring exercise.

“As our staff at MBPS were undergoing a long-term training programme by STEAG, the operations & maintenance contractor, the corporation was able to ramp down the initial 400 operational staff members of STEAG to 22 as at January 22, 2019. The STEAG staff compliment has been replaced by locals,” says the release.

“It is worth noting that the recruitment to fill in vacancies was carried out with due diligence tapping on both the internal and external market to find the right human capital to drive its goal of becoming a world class organisation,” adds the release. ENDS