Member Info for BOTS_PROJECTS

Financing and Sustainability

One of the major concerns in recent years has been longterm budget sustainability. This follows the switch from structural budget surpluses in in the period up to the late 2000s to structural deficits since that time. This is in turn because fiscal expenditure has not been reduced in line with declining revenues, making the current fiscal trajectory unsustainable. This is reflected in the long term decline in Government’s Net Financial Assets (NFA) (roughly equivalent to government savings minus debt) (Figure 5). Between 2008 and 2022, NFA declined from plus 40% to minus 20% of GDP – a decline of 60% of GDP.

The current level of the NFA is not in itself a concern, as public debt is still relatively low. But the trend is unsustainable; its impact is disguised by the fact that deficits have mainly been financed by running down savings rather than borrowing. But if cumulative deficits had been financed by borrowing, this would have been equivalent to a rise in public debt from 10% to 70% of GDP, which would have set alarm bells ringing. Hence the frequent references to the need for “fiscal consolidation”, both in the Ministry of Finance’s annual Budget Strategy papers and IMF Article IV reports on Botswana.

Economic Growth

GDP growth in 2023 came in at 2.7%, well below the rate of 3.2% that had been projected by both the Ministry of Finance and the IMF. The poor growth outturn was partly due to the diamond sector (mining, trading and cutting & polishing) contracting by 1.2% during the year, due to the weak global diamond market. But the slowdown was broader than this, with the non-diamond private sector slipping from 4.9% growth in 2022 to 3.6% in 2022.

Obviously this is far below the rate deemed necessary to achieve the objective of high-income country status by 2036, of 5.7% a year. The disappointing growth outturn should not be surprising, however. While there is a high-level commitment to pursuing export-led growth, as is essential for a small open economy, too many policies have been focused on inward looking protectionism, which has the opposite outcome and leads to higher prices and decreased efficiency and competitiveness. There are also increasing barriers to inflows of foreign direct investment, notwithstanding commitments to “openness”. Encouraging inward FDI is of course an essential component of export-led growth.

A further barrier to growth is the large size of the public sector, much of which is characterised by inefficiency, thereby reducing the potential for productivity growth in the economy. There is a particular problem with many state-owned enterprises (SOEs), where the need for reform, restructuring and possible privatisation has been continually avoided, allowing their inefficiency, low productivity and dependence on government bail-outs, at taxpayer expense, to continue indefinitely, and drag down the economy as a whole. Further inefficiencies are evident with public investment in both infrastructure and human capital. Finally, there is excessive and growing regulation, implemented in a manner that is not business-friendly, and an unwillingness to commence the Regulatory Impact Assessments (RIAs) that have long been promised before introducing new regulations.

This is the main point I am referring to - if locals are subsidised and BPC is bailed out every year, then not a great market dynamic. Of course, they can always increase cost the locals pay but that takes time (not helped as Botswana is a large country but with a small narrow economy).

The regulated price of electricity is also well below the cost of production (and is also exceptionally low by international standards), requiring huge tariff subsidies to Botswana Power Corporation (BPC) from the budget. While the cost of the subsidy in the 2024/25 financial year is not explicitly stated in the budget documents, it is understood to be around P1.5 billion for the year, which will be funded by Government borrowing.

Https://www.econsult.co.bw/tempex/file/Econsult%20Review%202024_1st%20Quarter.pdf

Full report here.

Https://businessweekly.co.bw/news/power-plays-and-fuel-fumbles

Power is heavily subsidised to the public in Botswana (and fuel) meaning true market pricing is not happening there. This needs to be understood in order to understand CBM pricing for power generation. Only thing I know for sure here is that Tlou (and Botala and Sekaname) will never dictate CBM power generation pricing, and any comments by posters here that seek to make us believe TG will negotiate bumper pricing ahead is pure folly.

If we could actually understand the dynamics in play here then we might be closer to understanding why CBM and Tlou etc has been held back for so long. it would be real good if TG would start commentating about this in company Updates and Outlook.

Https://www.mmegi.bw/features/the-audacity-to-be-a-unicorn/news

Maybe this is where Tlou's future lies.

Winni, that logic has been there since Day 1 for Tlou and Botswana and southern africa. So yes i understand why you say they will likely move faster to embrace CBM as a feedstock for local power generation, the constraints that have played for many years just simply dont all disappear. That takes time, and in the meantime BC has signed 5 or 6 small scale solar PV projects for power generation as well. And BPC is not flush with cash, which means Govt of Bots is not flush with cash. And so progress will, as far as I am concerned, continue to frustrate all of us by being much slower than it logically should be.

The proverbial trickle building into a flood will take time imo ! A lot more time than folks here likely anticipate.

Https://www.mmegi.bw/news/the-agony-of-bdp-primaries/news

Gamalete: While initially the Gamalete constituency was expected to pit incumbent MP and Minister for Minerals and Energy, Lefoko Moagi, and former Minister of Wildlife and Tourism, Philda Kereng, in the primaries, the latter withdrew before she was removed from Cabinet. Now Moagi is facing newcomer Dr Derrick Tlhoiwe, a chancellor at DDT College of Medicine.

Tlhoiwe is a public health medicine specialist and is expected to capitalise on Moagi’s denting popularity after his stance in the landmark Balete land case last year. Moagi came under attack after he failed to verify whether or not Kgosi Mosadi Seboko of the Bamalete was telling the truth when she accused President Mokgweetsi Masisi of meddling in the Judiciary. Although Moagi later came out to state that he did not support the move to remove Kgosi Mosadi from the Pan-African Parliament (PAP), the legislator is said to be facing an uphill battle to win back the hearts of his tribe. This makes the race wide open.

The race is not wide open - he is out. Corrupt and a drunk and only in things for what he can divert to his pension pot. What they are not talking about is Jindal fiasco. Wait and see !!

As usual, you miss the point of the post.

Shares in issue are 1.27 billion with roughly 200m more to issue to the Doc for his Loan and interest capitalised (and converted) and 150m to BPOPF for their loan and interest capitalised. Quasi fully diluted therefore is now running at around 1.6 billion (in the fullness of time).

Amazing how you make light of such large numbers. And to think I was scorned (and abused) when suggesting over 1 billion would be issued at a time when around 600m were in issue. You guys really have selective memories !!

However I dont. And I am consistent, unlike flip flop artists. Have a nice week ahead of absolutely no progress - now that the quarterly report is out of the way.

Any taken by Directors or large shareholders (over reporting threshold) would have been disclosed. Surprised you didn't know that.

More easy fundraising just completed - 16m of the 169m remaining (out of initial 379m) shares placed prior to expiry of PP date. 60 per cent placed after 5 months effort; meaning 40 per cent not placed.

All things considered, i consider that a good effort by Tlou. But of course i would never admit that to Clooless. What is however perhaps relevant is the Doc decided further investment - at this point in time. He either simply dug in and said no more; or he (and TG) played a damned good game of 'chicken', by putting it up to BPOPF to commit more money to the project.

I guess it was missed by most that the Lesedi sub-station is taking until 3rd quarter to complete, which invariably means 4th quarter. Will delays push first revenue into calendar year 2025 I wonder.

Remember please - elections to be held October 2024. And whilst they should not affect Tlou's progress, somehow or other - they will. Basically Elections in Botswana are all the is going to matter there for remainder of this year. And personally I am interested to observe how SIK tried to interfere, sabotage, and usurp the process. From his new home base in Eswatini (or Swaziland) given the S Africans are moving this particular problem elsewhere - desperate men do desperate things.

Like take money from wherever it can be grabbed even if the coupon terms are horrendously unattractive. 10 per cent has a nasty habit of adding up to a nasty cost after a few years. But let's give the benefit to hindsight - since few here seem to have much foresight.

On 15 December 2023 Tlou Energy Limited announced an Offer.... for the issue of up to 379,629,948 new shares. The Offer closed on 31 January 2024 with applications for 32,554,360 Offer Shares, raising approximately A$1,139,403. The SUCCESS of this Offer equates to 8.5 per cent . Well Done !

Thanks again Brad for coming off-filter and clearing up all our confusion. The history lesson on Sekaname was as always informative although the original post was about Hydrogen.

Good man HB. Finally acknowledgement that i know what i am talking about. Much appreciated pal.

There’s no climate solution without hydrogen. It’s the missing piece of the clean energy puzzle, says a global CEO-led initiative that brings together leading companies with a united vision. This initiative has ballooned to 150 multinationals companies from its modest 13-leader 2017 launch at the World Economic Forum.

The global Hydrogen Council it has advanced into now represents the entire value chain of hydrogen, which is Planet Earth’s most abundant element, as well as being renewable and non-polluting. “We need to embrace hydrogen as a global

energy solution now more than ever,” is what is being stated by this council, amid hydrogen development taking place left,

right and centre across Asia, Europe, the Americas and to a lesser but moderately advancing extent in Africa.

“The energy transition is happening faster than many people (including me!) dared

hope,” Microsoft luminary Bill Gates stated in an article this month, after visiting a Texas company in which the platinum group metals-promoting and South Africa-linked venture capital company, AP Ventures, is associated.

Please share how you feel Brad has credibility here HB. I mean he has been posting here for years - he is accepted for his informative and relevant posts or because you all are just to nice to tell him otherwise ,,,,,,,

I guess this is a free pass .

Thanks for letting us know Brad. Very helpful.

You are right Brad - Tlou will be able to dictate a higher price for electricity sold to BPC.

You are right Cloo - On 15 December 2023 Tlou Energy Limited announced an Offer.... for the issue of up to 379,629,948 new shares. The Offer closed on 31 January 2024 with applications for 32,554,360 Offer Shares, raising approximately A$1,139,403. The SUCCESS of this Offer equates to 8.5 per cent . Well Done !

It's all Good now - Tlou are about to become the saviour of cheap power in Botswana and eventually the wider southern africa region. Well done Saint Tony and team; you're the best!! Brad to be voted in as next President please. And Cloo to replace CC and next CFO - he know his stuff!!

Well copper is the metal of the moment for sure, at $10,000 per lb. And pozzolan in and around $100. So is hardly surprising his focus (assuming your post is correct) is on copper project. There is a huge amount of exploration and development projects in Africa chasing metals for the green transition.

Not what we want to hear for Sunrise progress. We can be a willing Seller, but to complete the deal, we need a willing Buyer and therein lies the probelm i guess.