In a ground-breaking development for the Botswana oil and gas industry, leading diamond producer Debswana and national oil body Botswana Oil have entered a strategic partnership that is aimed at capacitating citizen-owned companies in the fuel supply value chain.
Through the agreement, Botswana Oil will play the facilitatory role of assisting emerging citizen-owned fuel supply and fuel transportation companies to supply Debswana’s Jwaneng, Orapa, Letlhakane, and Damtshaa mines with diesel and petrol for their operations.
This agreement forms part of Debswana’s Citizen Economic Empowerment Programme (CEEP), which seeks to accelerate citizen participation in its supply chain.
Notably, Debswana expects to increase citizen companies’ market share in the fuel supply and transportation industries, which have over the years been dominated by foreign-owned suppliers.
Consequently, the agreement will also ensure security of supply for Debswana operations which are a mainstay of the Botswana economy.
Debswana procures about a 100-million litres of fuel a year.
As part of its mandate to facilitate citizen participation in the petroleum sector,
Botswana Oil will, under the agreement, be obliged to transfer skills to citizen suppliers and transporters during the contract period.
Additionally, it must ensure delivery of competent and skilled citizen suppliers and transport companies upon completion of the agreement.
The five-year partnership, valued at about R10.4-billion, will also create opportunities
for support services along the oil value chain, such as trucks staging, truck stops,
tyre services, wash bays, truck service, maintenance jobs and other related
Botswana Oil will leverage economies of scale to ensure sustained commercial value to all the parties.
The partnership is in line with both Debswana and Botswana Oil’s citizen empowerment ambitions.
The two companies are currently working on a joint transition plan that will culminate in an August 2022 kick-off consignment.
The project with Botswana Oil, through its citizen-owned partners, is expected to deliver the first consignment to Debswana on August 1, 2022.
As part of opening up opportunities for citizen service providers in the fuel supply space within Debswana, the parties will in the near future issue a joint ‘request for proposal’ to identify suitable citizen service providers (logistics and fuel supply) to partner with Botswana Oil as subcontractors for delivery of the contract scope.
Debswana management extended its gratitude to the outgoing service provider and its employees for the services rendered prior to this transition.
In her remarks regarding the partnership, Debswana acting MD Lynette Armstrong expressed her delight at the development.
“This is a huge milestone for Debswana, especially for our ‘One Dream, One Team’ 2024 strategy which is very intentional about citizen participation,” she says.
She adds that she is also proud that, with this major step forward, Debswana is well on the way to realising its strategic ambitions under the CEEP.
The programme has two breakthrough outcomes on creating and delivering shared citizen spend value of R26.09-billion and 20 000 jobs by 2024.
This deal therefore forms part of the 2021 CEEP key breakthrough actions, which include the continued localisation of Debswana’s long-term contracts, the development of citizen participation in the supply and transportation of fuel and delivering on a transformational plan that creates opportunities for citizen ownership and participation in the original-equipment manufacturers sector.
“We remain resolute and intentional about impacting on our communities and economy at large through such transformational initiatives,” she says, adding “to Botswana Oil, we thank you for coming on board and we look forward to a fruitful relationship”.
Botswana Oil CEO Meshack Tshekedi says that, for the company, this is a “thrilling development” that brings the third prong of its mandate to the fore, as it emphasises the meaningful facilitation of citizens in the oil and gas industry.
As an anchor partner, Botswana Oil will shoulder the responsibility for the development of the citizen suppliers and ensure business continuity to Debswana’s operations.
Moreover, supply margins that have, over several years, been made outside
the country through the importation of fuel, will now accrue to Botswana Oil.
The benefits that will be realised from these margins will trickle down as far as the Motswana community, through Botswana Oil paying taxes and dividends to the local government.
“The partnership is a worthy investment which will play a significant role in the development of homegrown oil companies and transporters as envisaged in Botswana Oil’s citizen facilitation framework,” he says.