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BERA denies Botswana Oil exclusive import license

Publishing Date : 14 May, 2018


The energy sector regulator, Botswana Energy Regulatory Authority (BERA) has rejected an application by the state owned Oil Company – Botswana Oil Limited through which it sought to be awarded an exclusive license that will see it importing 50 percent of the national petroleum requirements.

The recently enacted BERA Act allows for an entity to be issued with an exclusive license as long as the Authority is satisfied with the application. In order to process BOL’s application for such a license, BERA conducted public hearings to allow the public to express their view.

Botswana Oil Limited Chief Executive Officer (CEO) Willie Mokgatlhe had explained that his organization is fully capable to handle the exclusive import license which they had applied for, but BERA has since made a determination that the license application will not be acceded to for now based on technical, skills and financial constraints.

Despite efforts by Botswana Oil to sell their case to industry players, the public and stakeholders in the energy sector, BERA decided against them and rejected the application on the grounds that BOL failed to make out a case to demonstrate the necessity of the exclusive license. During the public proceedings, the CEO had highlighted that unlike other strongly contending companies in the sector they have the capacity to oversee the whole importing of petroleum in the sector.

The Botswana Oil Limited CEO further explained that the application for the exclusive import license which is in line with the section 38 of the 2016 Botswana Regulatory Act allows for the parastatal to hold such a license, to which the authority crashed the claim with another section in which there should be a submission of certain documents to aid the approval for such.  The decision of the Authority is further noted to be based on the failure of BOL to meet the requirements as stated in Section 32 (9) (d).

According to BERA the section requires the applicant to present their financial and technical capability, a requirement that Mokgatlhe’s organisation could not satisfy. This contributed immensely to the final decision made by BERA. The Authority was not in a position to do an assessment because the requisite evidence was not availed and there was no explanation to what changes would effect in the importing of petroleum products should the license be granted to BOL.

They cited that such an important decision could not be taken on the basis of speculation because they were not afforded documented plans on the costs and benefits of the proposal. Although Botswana Oil Limited CEO made a case of job creation and sustainability as benefits to the public when presenting to during the public hearing, BERA failed to establish the said benefits of the import license because there was no documentation to support the assertions of the Botswana Oil Limited’s CEO.

On Technical Capability, it was established that Botswana Oil Limited does not have the capacity to handle the licensing. This is one of the core requirements when applying for the exclusive license. The requirement is such that Botswana Oil Limited should have stakeholders in place to work with but at the time of the hearing Botswana Oil Limited indicated that they have no one place yet but there are efforts to engage them.

In preparation for the changes in its role, Botswana Oil Limited was said to be looking at a partnership with a Middle East company - Oman Trading International for the procurement of petroleum and petroleum products. During the hearing, Mokgatlhe explained that the Government of Botswana currently owns two depots which can hold up to 62 million litres (l) of petroleum in Gaborone and Francistown. Currently Botswana Oil Limited imports 10 percent of petroleum product of the market and also have access to government storage facilities of close to 60 million litres for commercial sales which also serves to sweeten the strategic stock.

Furthermore the decision to reject the exclusive import license was based on the realization that although Botswana Oil Limited has access to storage facilities they do not have sufficient storage to store the goods for 60 days uninterrupted.  This was supported by a finding by the Authority that the Government planned bulk petroleum products storage programme indicates that the expansion of the Francistown Depot and the Tshele Hills construction project and development of the new storage depot will only fulfill the 60 day stock capacity by 2022.

Despite Botswana Oil Limited having the support of a number of organizations, BERA explained that while Botswana Oil Limited had applied for 50 percent of the exclusive importing licensing, they had agreed and were aware that the awarding of the license would entitle them to 100 percent share of the import market. Mokgatlhe had stated that when BOL procures, they will deliver product for multinationals directly at their current 18.8 litres depots as they would not be importing for themselves.

During the hearing the Botswana Oil Limited CEO admitted that it is risky for one entity to be given 100 percent mandate for fuel supply. Mokgatlhe had said their fuel importation implementation of the product should be done overtime and they wanted to import 50 percent of the fuel volumes while the other 50 percent should be left to citizens companies. 

He said they want Batswana to also participate in the value chain and the idea is not for BOL to play in the retail or commercial space. Botswana Oil Limited has been given a 30 day period to appeal the decision at the High Court. Mokgatlhe is adamant the move is a strategic one meant to ensure consistent fuel supply in the country.



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