Govt ends multinational oil companies’ monopoly

BAKANG TIRO

editors@thepatriot.co.bw

Minerals and Energy Minister, Lefoko Moagi has reiterated government’s commitment to ending the petroleum and fuel industry monopoly, which has been dominated by foreign companies for quite some time.

Since the announcement some of the multinational fuel companies have come out with guns blazing, threatening to reduce their investments capacity in the country, a development that could result in job losses.

Answering question in Parliament recently, Moagi said the petroleum sector has been predominantly controlled by the multinational oil companies (MCOs) whose primary motive is to maximise profit and not prioritising national interests, especially the security of supply and citizen economic empowerment.

The MP for Maun West Dumelang Saleshando had asked the minister to state how the Statutory Instrument No.99 of 2023, published on September 2023 setting the 90% quota for petroleum product will affect entities that there are majority citizen-owned in the petroleum industry.

Saleshando also asked the minister to state the number of entities owned by Batswana who have been engaged by Botswana Oil for importation of petroleum products and the monetary value of the total imported products over the last three years. Botswana Oil is expected to hold 90% of fuel supplies.

He also demanded answers on how citizen-owned entities will be protected against BOL competition.

In response, Moagi said there are a few citizen oil companies.  However, he added that their growth has been hampered by barriers to entry making citizen empowerment in the petroleum sector virtually unattainable.

“The petroleum sector of Botswana is faced with several challenges. Some of these include limited investment into oil logistical infrastructure, intermittent fuel shortages, fuel being bought into Botswana, costly and fuel parcels, just to mention a few,” Moagi pointed out the constraints facing domestic fuel sector.

In many countries, he said, the National Oil Companies (NOCs) were formed to address challenges facing the petroleum industry.

In the case of Botswana, minister Moagi said the objective of establishing Botswana Oil Limited (BOL) was to address key issues such as ensuring the security of supply of petroleum products in the country.

He said the objective was to seek and implement alternative routes and sources of supply to reduce overdependence on one source (South Africa) of products which threatens the security of supply.

“As part of ensuring security of supply for the country, government has charged BOL with the responsibility of importing the majority of the fuel consumed in the country to ensure we have control on availability of fuel in the country by consolidation of volumes who then give BOL leverage to negotiate better outcomes for the country,” said Moagi.

Meanwhile, Moagi said the Statutory Instrument No.99 of 2023, published in September 2023 setting the 90% quota for petroleum products will not affect the majority-owned citizen companies, which is the remaining 10% of the quota allocation.

He said they will continue to import as per their volume demand, which has been confirmed to be under 10% of the current consumption.

“In the past three years, BOL has contracted 14 citizen companies to transport fuel imported by BOL as part of BOL’s citizen participation drive. The value spent on citizen transporters is broken as follows; 2021/22 P8, 312, 877.90, 2022/23 P73, 133, 605.40 and 2023/24 P3, 100,325.13,” Moagi buttressed.