BPC management contract to start in June
Brian Benza | Wednesday April 16, 2014 11:29
BPC is currently finalising negotiations of a three-year management contract with ESBI with the aim to have put pen to paper on the deal by June, BPC board chairperson Sebetela Sebetela told Mmegi Business yesterday.
Sebetela said ESBI would be tasked with a mandate of turning around the financial and operational performance of the troubled parastatal by 2018.
Apart from posting perennial losses, the parastatal is also grappling with challenges of transforming into a power generator and distributor.
Responding to widespread fears that engagement of the management contract will usher in massive retrenchments at BPC, Sebetela said among ESBI deliverables will be ensuring that not only adequate human resource capacity is built within the parastatal but also necessary changes are made.
“Our intention is not to chop any jobs but as with any transformation process there would be situations where some staff would have difficulties in transitioning from where they are to where they need to be. In that kind of situation then it would be up to to ESBI to determine who goes and who stays.
“After the evaluation by ESBI, which will identify the gaps within BPC, what ever needs to be changed will be changed,” he said.
Currently, BPC employs about 2,000 workers. According to a Sebetela, some of ESBI’S key deliverables would be to completion of strategic projects such as the planned Morupule C and the Greenfield 300MW power plant.
Turning around of the financial performance of the parastatal, which posted a loss of P1.2 billion in 2012, is also among ESBI’s top deliverables.
The BPC is statutorily required to operate as a going concern with its Act specifying that it should conduct its affairs on ‘sound commercial lines and produce a net operating income by which a reasonable return can be measured’. Last year, government pumped P1.49 billion into the BPC through a supplementary budget and transfer from within the ministry, and is set to inject a further P1.5 billion this year as a subsidy.
According to Sebetela, transforming BPC into an efficiently run operation will also be another ESBI deliverable as the parastatal will be expected to ensure that its assets perform proficiently in order to produce electricity at the required volumes, quality and reliability.
After 2018, BPC staff that would have been trained by ESBI will be expected to take over operations of the parastatal.
“It would be imprudent for us to raise performance to a certain level and then our people don’t have the capacity to sustain it once the management contract has lapsed.
“The board will be holding ESBI responsible for insuring that all the necessary coordination, direction and leadership is provided for, including the dimension of transforming BPC staff from where they are to where we want to be in three years time,” he added.
Government’s decision to hand over control of the struggling corporation to the consultants comes at a time when management contracts are gaining popularity as an element of commercialising power utilities and eventually privatisation.
A handful of other countries such as Namibia, Madagascar, Tanzania, Kenya, Rwanda and Lesotho have in the recent past introduced management contracts in their power sectors.
ESBI has done consultancy work for power utilities in South Africa and Namibia.
In Botswana, the company has already implemented an automatic generation control system, which helps balance electricity generation and demand in order to avoid load shedding.