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September 16, 2016

Will a new era of China-Africa relations ‘power up’ Botswana?

This feature was produced by Botswana journalist Baboki Kayawe with a reporting grant provided by the China-Africa Reporting Project, and was first published on Mmegi Online.

Morupule B at Palapye, Botswana’s hub of energy generation.

Morupule B at Palapye, Botswana.

Darkness envelops the whole village. The sky is clothed in a jet-black blanket as dark as the vast coal deposits that lie beneath the brown earth. Only the glitter of the stars is visible in the dark of the night. The irony is sadly baffling. It is a tale of rags in the midst of riches, emaciation in a sea of abundance and poverty with plenty.

This is Palapye, Botswana’s hub of energy generation, set in some of the richest coalfields of the southern African region.  It is here where the highly contested 600 megawatt (MW) Morupule Power Station B is housed.

Duncan Modise’s* business operations are situated in this central Botswana town. He runs a butchery, bar and restaurant. The entrepreneur is losing an arm and a leg due to perennial power outages, a harsh irony as his enterprises sit on the huge coal belt.

The fast-growing village is not exempted from loadshedding and like other parts of the country, disruptions in power supply are part of every day life in a country which produces less electricity than it needs to consume.

“It is very awkward for the village to be experiencing power outages yet we are in close proximity to huge coal deposits,” he says.

“It is really disheartening. When the situation was very bad in the past year, my businesses incurred massive losses. It was really bad. I hope the country finds a long lasting solution to this matter.”

The energy infrastructure sector is the lifeblood of any industrialisation process. The absence of reliable, robust and sustainable energy generation systems often points to the de-industrialisation of economies, as all entrepreneurial or business undertakings need to be ‘powered’ for growth to materialise.

The need for reliable energy supply cannot be overemphasised in developing economies such as Botswana. It is against this backdrop, that Botswana undertook to transform the 120MW  coal-fired plant built in 1989 in Palapye, into the 600MW Morupule B.  The primary motive for the project was to reduce the country’s reliance on South Africa, from where at one point it was importing approximately 80 percent of its power.

In 2008, a central contract valued at $970 million was awarded to China National Electric Equipment Corporation (CNEEC), whose workmanship several studies will later find wanting.

According to the contract, the last 150MW unit was due to be handed over to the Botswana Power Corporation (BPC) by October 2012.  The BPC is a state-owned entity statutorily tasked with electricity generation, transmission and distribution in Botswana.

Instead, CNEEC has stayed on at the plant due to regular failures, particularly in the boilers, which have caused frequent nationwide blackouts.

At the height of the power outages, minister of minerals, energy and water resources, Kitso Mokaila acknowledged the precarious supply position the country was exposed to, but expressed hope that loadshedding will be minimised due to the availability of excess power for import in the region.

“We have to admit that it’s a risky position.  But we have to remain calm because in the summer season we always have excess power available in the regional pool.  We can only face serious difficulties if other countries in the Southern African Power Pool experience shortages because then they will have to reduce the amount they export to us,” he said in October 2014.

Apart from an easing in the first seven months of 2016, Botswana has faced restrictive electricity supply since 2008 with frequent breakdowns at Morupule B meaning on average it has only run at about a third of its capacity.

The troubles at Morupule B have also weighed on the sustainability of the BPC, which has struggled to import increasingly expensive electricity from the region, while unable to secure cost-reflective tariffs from a government keen to keep electricity cheap for socio-economic stability and growth.

Since 2008, the corporation has run operational losses, only surviving through ever-rising subsidies and bailouts from government.

“The parastatal organisations that continued to experience operational and financial challenges include the BPC,” minister of finance and development planning, Kenneth Matambo said in his 2015-2016-budget presentation.

BPC recorded a net loss of P1.3 billion in 2013, compared to a net loss of P1.1 billion in 2012, due to increases in generation, transmission and distribution expenses.

“A large part of direct costs were incurred in procuring power from external sources, part of which were subsidised by government through an emergency power grant,” said Matambo.

Public finance watchdogs in Botswana, such as the Parliamentary Public Accounts Committee (PAC), are worried about the impact of delayed projects (such as the Morupule B expansion) on bilateral relations with China.

The ministry of foreign affairs and international relations maintains that diplomatic ties with Beijing have not reached a low, despite acknowledging that Chinese contractors have been blamed for poor project performance at Morupule B and other major public works. These other public works include the troubled expansion of the main international airport, Sir Seretse Khama International Airport, which was originally awarded to a Chinese contractor before being re-tendered to a local company, after the original contractor failed to deliver.

At the PAC’s hearings in May, one legislator, Samson Moyo Guma, who had just returned from Beijing, claimed the Botswana government and individuals were concerned about the performance of some Chinese companies working on Botswana projects.

“We want to know how we are dealing with poor performance of Chinese contractors because the two countries cannot enjoy good relations when there are issues of poor performance that have led to sour relations,” he said.

PAC members also queried the outcome of a trip to China undertaken in June 2015 by Foreign Affairs and International Cooperation minister, Pelonomi Venson-Moitoi.  At the time of her trip, government said she will be meeting with the heads of Chinese contractors and the Chinese government over poor project delivery in Botswana.

Responding to the PAC members, deputy permanent secretary in the foreign affairs ministry responsible for international relations, Thuso Ramodimoosi said some Chinese contractors performing poorly should not result in generalisations against all Chinese contractors.  He said painting all of them with the same brush will be wrong.

Ramodimoosi maintained that no diplomatic tiff exists between Gaborone and Beijing over poor project execution.

“There are some Chinese companies that are doing well, and others are not doing well.  But we cannot say diplomatic relations with China are at a low,” he told legislators during a PAC appearance in May.

Besides the PAC, the then minister of infrastructure, science and technology, Johnnie Swartz also conducted a countrywide mission focused on the progress of major public works.  The mission was motivated by concerns by cabinet, the country’s top decision-making body, with the quality of projects by Chinese contractors.

Ramodimoosi said the foreign affairs ministry was part of the mission.

“The intent of the mission was to inspect these projects with a view to engaging the resident ambassador of China to Botswana that some of their contractors are not performing well,” Ramodimoosi explained.

He further said minister Venson-Moitoi’s visit to Beijing last year to engage on a number of issues including the quality of projects by Chinese contractors, illustrated what the ministry was doing about the challenge.

Despite all this, Botswana still hopes that Chinese funding and expertise could assist in power generation projects.

The semi-arid southern African country hopes to secure assistance from pledges made under the ‘New Era for China-Africa Relations’ announced at the December Forum on China Africa Collaboration (FOCAC) action plan, for assistance in areas of energy and infrastructure.  At the FOCAC held in Johannesburg last December, Chinese premier, President Xi Jinping announced assistance and loans for Africa’s industrialisation worth $60 billion.

Botswana has submitted a preliminary plan for assistance dominated by energy and infrastructure projects, the Chinese Embassy has revealed.

Tang Shenping, director of the political section at the Chinese Embassy in Gaborone confirmed that Botswana partners have sought assistance in the energy, manufacturing and infrastructure sectors.

“The two areas are going to take the bulk of the funding required. Energy and infrastructure are very important for the development of every country. We also attach great importance to infrastructure and energy,” Tang says.

He said the developments around CNEEC and the government were “a totally business and market activity in which the Chinese government was not involved”.

“It was not a government cooperation. However, we acknowledge the importance of the Morupule B project to Botswana. We have since engaged in talks with the contractor to honour contractual obligations and duties,” he says.

Though he conceded that CNEEC is partly government-owned, Tang said he did not know that quantum of the stake. He maintained the autonomy and independence of directors, and said the Chinese government can only do ‘little interventions’ such as in instructing CNEEC to execute its responsibilities.

“Although (the) Chinese government has some shares in CNEEC, its operations and management are independent,” Tang says.

He expressed optimism that no future complications such as delays in project completion will ensue in the FOCAC energy and infrastructure cooperation.

Tang stressed that the ‘isolated case’ had not threatened Botswana-China relations.

“We enjoy good cooperation and this (Morupule B) is a very special and individual case.  The major problem in the Morupule B issue is not Chinese workmanship.  It is a conflict of culture.

“Lack of communication is the main setback.  The differences in our cultures, work ethic and attitudes towards project standard and management,” Tang added.

This industrialisation commitment is simply meant to aid Africa fast-track its economic transformation processes through transferring skills and technology from China, Tang said.

“It’s not neo-colonialism as some analysts call it.  We are assisting Africa where possible since we have passed through the industrialisation stage,” he says.

A scholar in Africa-China relations,  Mmoloki Gabatlhaolwe, who spent his post-graduate years in Xiamen University studying international relations, said Botswana’s economy has been growing at a snail’s pace in the last few years and desperately needs a boost.

“Manufacturing and energy production have proved to be important vehicles for development in many other countries as they have triggered economic growth and created many jobs. This is something we badly need right now with stalled economic growth and high unemployment rates,” he said.

Gabatlhaolwe said industrialisation and the availability of reliable and adequate electricity are inseparable.

“You can’t also have a successful manufacturing sector if you don’t have sustainable energy to fuel the factories. The two go together and China is a good example of how these sectors can turn a poor country around,” he said.

However, based on the past levels of engagement with China regarding infrastructure development, there have been costs associated with the benefits, which is typical in any collaboration. In addition, Gabatlhaolwe objects to Botswana seeking assistance under the FOCAC pledges, while at the same time expressing dissatisfaction with Chinese contractors.  “I blame this on those who represent the two countries, regarding implementation of these projects.

Chinese representation always understands that whatever they do, they do it in the best interest of their country.

“When they say they promote ‘win-win’ cooperation, they do not necessarily mean they will play a messiah and take care of the other partner’s part of the ‘win’.”

In his view, Africa has not taken time to understand China while the former has thoroughly done so. Gabatlhaolwe said while China has an African strategy on how to deal with Africa, which means they have already studied everything they need to know about how to engage with African countries, Africa on the other hand has no strategy and engages in business with China from an uninformed view point.

“Does Botswana have a strategy of how to deal with China? Are there any Memoranda of Understanding signed in the case of questionable project standards?” he asks.

While he hails Sino-Africa collaborations, Gabatlhaolwe believes African countries must deploy people who understand the dynamics in Beijing, to negotiate on their behalf.

He is steadfast that Africa could benefit fully from partnerships if African scholars on China are placed at the forefront of bilateral cooperation.

“Though China is an economic giant, it can play small economics too. Remember the eye is on the ball, which is to expand its geopolitical influence aiming at promoting and protecting its national interests.  “With its huge population, China has many people to take care of and so it needs all the minerals it can get. It is always looking for business opportunities everywhere, hence the need to understand them better.”

FOCAC simply highlights that China’s plan is to strengthen relations with Africa, to be large in scale, broad in scope and deeper at all levels. Gabatlhaolwe said in between the lines, is the benefit to China.

“They see Africa as a market for their goods. Remember that China now has excess production in many fields, including the processing industry, electronic appliances and textiles, which are all desperately needed by Africa.

“There is no doubt that since Chinese became involved, African economies are booming.

“Africans’ lifestyles are improving and with Africans affording more expensive items, they will not need low quality infrastructure or goods.”

Besides market creation, Gabatlhaolwe believes that China is helping Africa industrialise because it is looking at gaining African diplomatic support for its policies in the world.

“We really must understand the Chinese. For instance, we sign memorandums penned in their vocabulary but do we even know what ‘win-win’ means?” he asked.  “It is not ‘help’ if you look at it closely.  What they call ‘win-win’ doesn’t necessarily mean equal beneficiation. It could mean ’99-1’ win in their favour.”

So, what is the best way for Africa to optimally co-exist with Beijing in order for the promises of FOCAC to be rewarding to both partners? Firstly, Africa needs to understand China, Gabatlhaolwe emphasises.

And most significantly, Africa needs to know her needs and think of the best ways to secure that without becoming a victim. “Africa has to realise and understand her full development potential and maybe stop thinking she always needs someone. No one is going to do that on her behalf; not the West, not China.  “At present everyone sees Africa as a gift and pessimists have every right to dismiss China-Africa engagement based on their analyses.”

The Sino-Africa scholar is convinced that China already understands Africa as it spends ‘chunks of money’ on African studies. “It has its own think tanks that advise government when it comes to how to deal with Africa and how to get the best deals that bring maximum benefits to their country,” he stresses.

The argument that Africa has no clear strategy on engaging China may ring true as the foreign affairs ministry appears unwilling to discuss how the FOCAC potential will be unlocked. It is still unclear how much Botswana will need for its energy and infrastructural projects and what form this assistance will take, whether concessional loan, export credit line or others.

For more than two months, this reporter was sent from pillar to post within the ministry of foreign affairs and international cooperation’s department of asia-pacific relations, when seeking answers to these questions.

No comment was available on what objectives and specifications Botswana has regarding FOCAC’s potential or the complication arising from the previous difficult relationship with Chinese contractors and projects that did not necessarily meet standards.

Officials were unconvinced which department or individual was best suited to answer enquiries, between the ministries of finance and development planning, and foreign affairs.

Ambassador Diabi Mmualefe, who is director for Asia Pacific relations, was said to be best suited to comment, but the opportunity to interview the diplomat was not provided.

“We are still looking at how best to respond to your inquiry.  I am doing all I can to get a response as there is a likelihood you will be referred back to the ministry of finance,” said foreign affairs ministry spokesperson, Daphne Mhlotshwa.

The confusion around the contact point within the foreign affairs ministry for the FOCAC opportunity is symptomatic of the lack of strategy to successfully engage with China. The ambiguity contrasts with President Xi’s resolve and clarity in announcing the pledge in Johannesburg in December.

“China-Africa relations have today reached a stage of growth unmatched in history. We should scale the heights, look afar and take bold steps.

Let us join hands, pool the vision and strength of the 2.4 billion Chinese and Africans and open a new era of China-Africa win-win cooperation and common development,” he said.

Whether China-Africa engagement will be a ‘win-win’ greatly depends on how well Africa understands and defines her interests in the partnership. China, meanwhile, is set to ‘win all’ as the Oriental giant has clearly defined her priorities in the relationship.

*Not his real name

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