Botswana Oil Limited (BOL), the National Oil Company (NOC) of Botswana, is celebrating a decade of remarkable achievements since its inception in 2013.
BOL, wholly owned by the Government of Botswana through the Ministry of Minerals and Energy (MME), was established with a mandate of ensuring security and efficiency of supply and primary distribution of petroleum products in Botswana.
BOL mandate includes managing state-owned strategic reserve facilities, strategic stocks, bulk storage and distribution facilities as well as facilitating meaningful participation of citizens in the petroleum industry value chain.
It also serves as the Government’s transformation agent charged with the responsibility to unlock business opportunities across the petroleum sector value chain.
“Petroleum products are one of the critical commodities that constitute about 60 percent of the country’s energy needs, driving industrial production in mining, manufacturing, farming and power production. It is also a driver of economic activities including provision of essential services such as health, security, utilities, and infrastructure development in various sectors of the industry,” said Botswana Oil Limited Chief Executive Officer (CEO), Meshack Tshekedi.
Tshekedi who took over the leadership of Botswana Oil in 2018, has been tasked with transforming the country’s petroleum industry. Tshekedi is a transformational leader who believes in providing an environment where everyone can be their best selves at work and put their best foot forward.
“I am constantly encouraging creativity, innovation, and open mindedness amongst the team members across various levels within the company. The aim is to inspire each one of the employees to develop new ways to grow professionally while at the same time identifying avenues to improve our way of doing business for fulfilment of our mandate and ultimately achievement of BOL’s future success,” said Tshekedi.
10 YEARS OF REMARKABLE ACHIEVEMENTS
Botswana is not an oil producer country, but like any other country, having fuel is essential to the economy at all the time. Botswana Oil understands the expectation clearly, and it has been able to rise to the occasion since its establishment a decade ago. The company has been able to ensure security of supply, in line with its mandate, by supplying product when required at times of constrained supply situations, case in point being during the 2020 COVID-19 lockdown periods.
After formation, BOL developed capacity and capability within BOL able to take over management of Government strategic storage facilities from private entities in Francistown and Gaborone.
“Our business has grown from initial volumes of 4 million litres in 2014 to 187 million this last financial year with a revenue of about P3bn in the last financial year,” said Tshekedi.
“We have grown as a company to a staff complement of 130 from the initial under 20 staff members at inception. We successfully developed a road loading and off-loading facility (gantry) for the Gaborone Depot.”
BOL has become a well-established company with robust systems and have implemented many systems to enhance our business operations, including the SAP ERP which we even got an award for rapid implementation thereof. It has also introduced a product additive injection system at its facilities to deliver fuel to the specification of the customers.
The company has also presided over successful installation and completion of the product testing facility laboratory, which enables BOL to test all fuel parameters as prescribed by BOBS. The next phase of this project is to get the laboratory certified for ISO 17025. In addition to other achievements, BOL has developed a truck staging facility which is able to host 22 trucks at a time.
STRATEGY FOR SECURITY OF SUPPLY FOR BOTSWANA
Botswana has been relying heavily on South Africa for its fuel requirements, but South Africa is now a net importer due to reduced refining capacity and the country, therefore unlikely to cater for Botswana’s fuel requirements while grappling with their own fuel needs. The fuel is currently imported by various players without meaningful involvement of Government in the importation of this strategic commodity that provides more than 60% of the country’s energy needs.
“When BOL was established in 2013, Government wished to have meaningful involvement in ensuring security of supply of petroleum products in the country through the NOC, and key anchors of security of supply are; consolidation of import volumes; development of strategic fuel infrastructure; and activation of alternative routes and sources of supply,” said Tshekedi.
“Botswana Oil Limited (BOL) has a system in place to manage the relationship between contracted market demand and product to be supplied from import sources. All potential import routes into Botswana have been activated to the extent of keeping the requisite levels of strategic reserves and meeting its contracted market demand at a minimum.”
BOL currently has active supply contracts in South Africa, Namibia, and Mozambique, with more than one supplier from each route as a way of reducing concentration risk and ensuring security of supply. Alternative routes are operational, and the Government has a model in place to manage the cost differential which currently is under review by the Botswana Regulatory Authority (BERA) to make it easier for import through alternative routes to be introduced.
“As BOL we continue to look for opportunities to ensure there is security of supply for the country through the various collaborations with regional national oil companies and other strategic partners to deliver on key projects,” said BOL CEO.
“The ongoing expansion of the Francistown storage facility by 60 million litres and the planned development of the Ghanzi 60 million litres and 187 million litres Tshele Hills storage facilities will provide the country with over 60 days of strategic stock cover. In addition, the Ikaegeng Coal to liquid project which will convert coal to liquid fuels and chemicals will ultimately improve the country’s self -sufficiency and drive the much-needed industrialization of the country.”
STRATEGIC GOALS AND PRIORITIES FOR THE NEXT 10 YEARS
BOL understands thatthe oil and gas industry is a volatile and dynamic market which is sensitive to many global activities that affect the industry’s supply chain, prices of the commodity as well as its sustainability. Considering the rapid changes in the industry and to facilitate operational efficiencies, BOL will continue its journey towards digital transformation. This journey includes the improvement, integration, and automation of its Operational Management System which is a systematic and standardized approach to managing and implementing Occupational Health & Safety, Environment and Quality, including the necessary organizational structures, accountabilities, policies, processes, and procedures.
Integrated Management System
Implementation of an integrated management system (IMS) will enable seamless integrated business processes that are repeatable for different people within the organization. To enhance the quality of its operational efficiencies, BOL is also working towards Attainment of the ISO 17025 certification for its lab and another suite of ISO standards including the ISO 9001, ISO 14001, and ISO 45001.
Sustainability and Net-Zero Objective
BOL will also contribute to the energy transition as part of our new Sustainability Strategy where more emphasis will be on adopting best standards and practices in the Environment, Sustainability and Governance frameworks on business reporting, stakeholder engagement and our contribution to social responsibility and performance.
In addition, BOL strongly believe that its human capital is fundamental in ensuring that it achieves its strategic goals, and BOL commits to developing its people for the future of work through Culture Transformation project, Graduate Development, Leadership Development Programmes among others.
IMPLEMENTATION OF IMPORT LICENCE, STABILISATION, AND FINANCIAL SUSTAINABILITY
Following years of engagements with the Government and regulators as well as a lot of work behind the scenes, a statutory Instrument No.98 of 2023 was finally published on the 29th of September 2023, cited as the Botswana Energy Regulatory Authority (Quota Allocation) Order, 2023 giving BOL 90% quota allocation to import all Petroleum Products into the country. The order shall come into operation on the 1st April 2024.
The implementation of this Import License by BOL will bring the much-needed stability in the Botswana market in terms of security of supply through volume consolidation. In addition to security of supply, BOL will reach notable milestones in terms of financial sustainability on behalf of Government and by extension, the citizens of Botswana. It is under this financial sustainability, that Government through BOL will have access to more financial resources to finance more infrastructure that is needed to further sustain the industry.
TRANSFORMATION AND UNLOCKING VALUE CHAIN OPPORTUNITIES
With enough scale brought about by volume consolidation under the 90% import quota allocation, BOL has a work stream that is tasked with transforming the oil and gas industry in Botswana by deliberately unlocking opportunities for citizen businesses in the value chain. The company looking at increased involvement by citizen companies in logistics and auxiliary supporting activities, such as maintenance services, including depots, tyre services and provision of truck staging facilities, among others.
EXPANSION INTO REGIONAL TRADING
With the expansion of storage facilities and taking advantage of Botswana’s position in SADC, the company is actively exploring setting up a Trading subsidiary that will look into entering markets beyond Botswana through the use of added facilities. This will include exporting some of the fuel and chemicals coming out of the planned petrochemical plant explained below.
PETROCHEMICAL INDUSTRY THROUGH IXTL
For countries, energy security is integral to energy independence. To achieve the goal of reducing oil imports, BOL embarked on developing a petrochemical industry through a Public Private Partnership (PPP) Model. This would cut Botswana’s dependence on foreign oil and thus reduce the acute pressure on the country’s foreign exchange. As was seen in South Africa, the petrochemicals industry can drive economic growth and job creation. BOL has assessed costs and benefits of the development of a Coal to Liquids (CTL) industry and its attractiveness to the Botswana market. .
The establishment of BOL was to implement strategic programmes to meet the Government’s ambitions of economic development, market restructuring and energy security. As Botswana contemplates to attract investors in CTL development, it will in effect be able to leverage ‘producer power’ to build an industrial base, as witnessed by Sasol in South Africa. The challenge is to make astute decisions about how Government will participate and how to ensure citizen participation in this complex industry. The PPP project “dubbed” the Ikaegeng XTL project is anticipated to be developed through the Design, Build, Finance, Operate, Maintain and Transfer PPP model.
THE CITIZEN ECONOMIC EMPOWERMENT PROGRAMME
The partnership between Botswana Oil and Debswana Diamond Company is a significant development which was operationalised in August 2022 with a five-year contract between the parties. The essence of the contract is that BOL and Debswana entered a Citizen Economic Empowerment (CEE) partnership and through the CEE partnership BOL will supply the Debswana Jwaneng, Orapa, Letlhakane and Damtshaa mines with fuel for their operations over a five-year period. Through the partnership, BOL will deliver over 600million litres of diesel to Debswana over five years and over 120million litres have already been delivered during the first 12 months of the partnership.
The partnership is a landmark project in terms of value creation for Batswana in the oil and gas industry. It will have many firsts as 100% citizen owned companies will be prioritized in the fuel supply value chain and support services. This arrangement is already in place and both companies are monitoring the project’s impact very closely.
A key component of this partnership is that it is a vehicle for citizen economic empowerment where BOL plays a pivotal role, as part of its mandate, to facilitate citizen transporters in supplying transport services for this contract. This partnership is targeting emerging citizen transporters and includes their development and assistance in complying with industry standards through an extensive and carefully crafted Citizen Economic Empowerment Programme (CEEP).
IMPACT AND BENEFITS OF THE CEEP INITIATIVE
The CEEP initiative has created an opportunity for citizen participation in the fuel supply value chain at a scale bigger than has ever been done in the country. It has increased citizen companies’ market share in the space of transportation and fuel supply, creating jobs in the country.
Other benefits include opportunities for support services in the value chain such as trucks staging/ truck stops, truck service and maintenance, tyre services, and wash bays creating further jobs for Batswana. It has presented an opportunity to build the required scale, capacity, expertise, and experience in Batswana to participate in future businesses such as the BOL Import Mandate and the future Debswana business, without depending on the need for BOL to facilitate their participation.