BMC seeks another P300 million bailout

Isaac Pinielo | Friday July 31, 2015 14:28

 

Last week, Parliament’s finance and estimates committee chaired by Ignatius Moswaane, tabled a financial paper requesting for supplementary expenditure for the consolidated and development funds.

The paper is expected to be debated in Parliament next week.

According to the committee, the BMC has experienced operational losses since 2005, which have put it under immense financial pressure and as a result the organisation has accumulated significant debt from commercial banks and government to finance its operational losses.

Speaking to BusinessWeek, Moswaane said it is very imperative for the commission to get a bailout since its financial troubles are not as a result of mismanagement, but unforeseen circumstances.

“We know that the commission suffered heavily during the one-year ban by the European Union (EU) as well as the outbreak of the Foot and Mouth Disease (FMD) in the north of the country,” he said.

In a bid to raise funding for the capital injection, the Ministry of Agriculture has proposed to reduce the annual approved budget for the Zambezi Field Services sub-project by P150 million.

“The Zambezi Field Services project is still being redesigned and that funds are unlikely to be spent,” reads the paper.

The ministry also proposed the reduction of the approved budget for the Integrated Support Programme for Arable Agriculture Development (ISPAAD) by another P150 million to raise capital injection for BMC.

It is anticipated that due to below average rainfall, fewer payments will be made under ISPAAD.

BMC is currently sitting on a debt worth P760 million from both government and other financial institutions.

 Due to perennial heavy losses, the government has been forced to pump a lot of money into BMC that accumulated to P594 million in loans.

In addition, BMC borrowed around P125 million to upgrade the Francistown plant and another P50 million forms Banc ABC to resuscitate the Maun plant.

Last year, the commission got a P300 million loan from Standard Chartered Bank in an effort to speed up payments to farmers seeking cash on delivery for cattle purchased.

BMC is currently implementing a turnaround strategy, which government officials believe would require P600 million to complete.

In 2013, BMC has bounced back to profitability, recording P26 million after tax profits. This was a reversal from the huge successive losses of P324 million in 2012 and P87.82 million in 2011.