Parliament approves over P1.6b supplementary budget

The last session of the fourth meeting of the fourth session of the 12th Parliament ended last week with legislators approving over P1.6 billion proposed supplementary budget Fund.

It will be used to mainly improve the power supply situation throughout the country. Supporting the proposals, Legislators took turns in advocating for their respective constituencies requesting both Serame and her colleague at the Ministry of Minerals and Energy, Lefhoko Moagi to ensure that all constituencies benefit as electricity is a necessity.

Presenting the Financial Paper No. 1 of 2023/2024 which contains proposed supplementary budget and reallocations under the Development Fund, Serame told the house that the Ministry of Minerals and Energy requests a supplementary budget of P1 675 920 000 and an additional Second Transitional National Development Plan (TNDP) Total Estimated Cost (TEC) of P1 175 920 000 to alleviate the prevailing electricity shortage in the country and to enable Botswana Power Corporation (BPC) to meet its loan repayment obligations during the current Financial Year 2023/2024.

Serame said the country is experiencing significant electricity supply constraints arising from inadequate internal generation from Morupule B Power Plant coupled with the prevailing regional power generation capacity shortfall.

Despite the improvement in Morupule B Power Plant performance due to the operation and maintenance strategy implemented in 2021, the plant continues to experience plant reliability challenges due to construction and equipment defects which are being addressed through the ongoing defects remedial works project.

She said that the power supply gap arising from inadequate generation is to be covered through power imports and or emergency diesel-based generation facilities.

Intermittent loss of generation at Morupule B Power Plant coupled with non-firm power imports from South Africa poses a significant challenge to meet the country’s electricity demand.

If not addressed, the country could experience a crippling energy crisis. To address this risk, BPC needs to secure additional firm power imports. The target is to secure an additional 100 Mega Watts of firm power imports.

The required emergency funding to avert an electricity crisis risk in the country is estimated at P1 375 920 000 for the current financial year. Additionally, the Corporation has an outstanding loan balance of USD315.7 million equivalents to P4.2 billion.

This loan was procured to finance Morupule B Power Plant and runs up to March 2030. The loan has a bi-annual instalment of P350 million.

This translates to P700 million per year, of which BPC has already paid P400 million leaving a shortfall of P300 million to fully cover the annual loan instalment. This brings the total funding requirement of BPC to P1 675 920 000.

She said in order to finance the Supplementary Budget under the Development Fund, it is proposed that a total of P1 675 920 000 be re-allocated from slow spending programmes and projects.

Serame said that the annual budget of this project needs to be reduced by P55 150 000 from P311 000 000 to P255 850 000 to cater for supplementary budget for the Botswana Power Corporation Support.

Further, that the Supplementary Estimates of Expenditure contained in this Financial Paper were prepared pursuant to the authority conferred upon the Minister responsible for finance by Section 119 (3) (a) of the Constitution and the requirements of the Presidential Directive CAB.1/99 which provides guidance for assessing requests for Supplementary Budget estimates.

She said Section 119 (3) (a) of the Constitution provides that “if in any Financial Year it is found that the amount appropriated by the Appropriation Act for the purposes included in any organisation of expenditure is insufficient or that a need has arisen for expenditure for a purpose for which no amount has been appropriated by the Appropriation Act, a Supplementary Estimate showing the sums required shall be laid before the National Assembly.....”

Further that Presidential Directive CAB.1/99 on the other hand stipulates that, “Accounting Officers should strengthen their expenditure control measures and restrict Supplementary Estimates requests to cover unforeseen requirements and emergencies only”.

Furthermore, Presidential Directive CAB 18 (A)/2016 underscores that Supplementary Budget requests should strictly cater for unforeseen requirements or emergencies and that such requests should be catered for by budget cuts from other areas in the existing budget.

Serame said following the 2020 contraction caused by the COVID-19 pandemic, the Russia - Ukraine conflict and other emerging challenges such as climate change risks, the economy has experienced a rebound thereafter.

Nonetheless, the structural weaknesses stemming from Botswana's heavy reliance on the diamond industry for growth, exports and fiscal revenue continue to be felt. The supplementary estimate request, is therefore, proposed under these challenges and uncertainties in the economy.

As such the proposed Supplementary requests will not increase the 2023/2024 annual provision or the Transitional National Development Plan Total Estimated Cost (TNDP TEC).

She said that the Ministry of Minerals and Energy has proposed to source an amount of P260 000 000 from their 2023/2024 approved Development Budget to partly offset the required amount.

It is proposed that the balance of the required funds amounting to P1 415 920 000 be sourced from the 2023/2024 approved Development Budget across Ministries and Departments through budget re-allocations.

Further that the required Transitional National Development Plan Total Estimated Cost (TNDP TEC) amounting to P1 175 920 000 will be sourced from the approved TNDP TEC for programmes within the Ministry of Minerals and Energy, specifically: Power Generation and Distribution; as well as National Security of Petroleum Supply.

It should be noted that the total approved 2023/2024 Development Budget is P21 007 860 353 whilst the expenditure as at 30th June 2023, stood at P3 786 644 233 or 18 percent.

The level of expenditure is below the ideal level of 25 percent for quarter one of the financial year hence the request for the re-allocation of the budget.

“I have noted with appreciation, the report from the Standing Committee of the Finance and Estimates and I wish to assure the Committee that the recommendations of the report shall duly be implemented”, the Minister promised.