Parastatals sink deeper into multi-million debt

Topping the list of entities facing financial challenges is the Botswana Meat Commission (BMC), burdened with outstanding loans totaling P248 million from the Public Debt Service Fund, according to the report for the financial year ended 31 March 2022.

“The above loan is made up of P160 million due in 2019 and P88 million due in 2022. As at 31 March 2022, the two loans were still unpaid,” the report says.

The Commission’s auditors noted that the loans were for a period of 12 months up to February 2020 but the Commission had not made any payments within the stipulated period and no interest payments had been made as per the agreement.

“In response, management acknowledged that BMC was in breach of two government loans and that a conversation around the possibility of the restructuring of the two loans had ensued with the Ministry of Finance,” the report says. The report says management further noted that the breach on the part of BMC was attributed to the cash flow challenges.

“It was stated that the Ministry had not yet responded to the request of restructuring and that the Commission was fully aware of the impact of defaulting to its credibility within Government and the market at large,” the report says.  According to the report, “Management further stated that if the Ministry acceded to the request of BMC to restructure the loans, repayments would commence in 2024 after the BMC had started enjoying the rewards from successful implementation of the MERITING Strategy.”

Another parastatal that is failing to honour its loan from the Public Debt Service Fund is Air Botswana.

As of March 31, 2022, the loan balance amounted to P230 million, with the loan still in arrears as reported in the previous year. The report highlights that installments of P22 million and P23 million, due in June 2021 and December 2021 respectively, were not honored.

The Botswana Postal Services had also secured P140 million from the same Fund. As at 31 March 2022, the balance on the loan was P138 million and no payments were made in the year under review.

Regarding BCL, the report says “an amount of P900 566 097 was loaned to BCL to meet the costs of liquidation. The loan status remains the subject of inquiry of my office” adding that “This is a long outstanding matter.”

The Auditor General stated that “The other amount of P211 944 430 was paid to BCL as an advance to cover liquidation expenses for which there is no clear guidelines.”

The Botswana Development  Corporation also secured a loan amounting to P89.5 million. “The loan amount to the Corporation for the construction of the Gaborone International Convention Centre (GICC) project was P89 500 000. The outstanding balance as at 31 March 2022 was P43 559 525, after a payment of P4 826 597 in the financial year 2021/22,” the report says.

Regarding the National Petroleum Fund (NPF), the report reveals that investments totaling P66 million, as per the balance sheet as of March 31, 2022, were still pending remittance to the government by former Fund Managers.

“Management should monitor all the investments to ensure that they are recouped into the government account by October 2023 in line with the maturity date. The contract between the Ministry and former Fund Managers elapsed in 2018 and it was noted that the levy collection system that was procured at a cost of P31 million by the Department of Energy had not been handed over to the Ministry by former Fund Managers,” the report says.

The then acting Auditor General, Keneilwe Senyarelo said; “In view of the said circumstances surrounding management of the Fund by the former Fund Managers, I consider that timely action should have been taken to ensure that all properties of the Fund are taken into custody of the find.”