This week the State Oil company, Botswana Oil was at pains to explain the circumstances around which it granted Tec CTLa little known company co-chaired by the President Ian Khama’s cousin, Ogaisitse Khama an offer for a multibillion deal. Staff writer KITSO DICKSON reports on a deal that has set tongues wagging in the petroleum industry.


The State Fuel company Botswana Oil Limited was thrust into the public spotlight after it entered into a P3bn/year deal with a little known oil company associated with President Ian Khama’s distant cousin, one Ogaisitse Khama. Ogaisitse is Tshekedi Khama’s grandson.

Botswana Oil gave Tec CTL, a New York based fuel outfit with little commercial background a commitment to buy 20 000 barrels per day. Tec CTL announced a month ago that it had garnered the guarantee from the state company to provide what amounts to almost 90 per cent of the national daily needs.

The State owned Oil Company was at pains to explain the offtake agreement with Tec CTL this week. Tec CTL a company chaired by Ogaisitse Khama, a distant cousin to President Ian Khama, used the letter of undertaking from Government to seek funding from the money markets. Botswana Oil says the offer letter was given after Tec CTL submitted a proposal seeking to venture into the Coal To Liquid (CTL) industry.
However, they insist the letter is of little consequence adding that they had not signed any contract with Tec CTL.

Both Botswana Oil and Tec CTL were in the headlines from early June after the latter prematurely announced through mainstream media the undertaking from Botswana Oil which they viewed “favorable”, later facilitating a $3 Billion Working Capital Facility With Milost Global, an American Private Equity firm.

It was anyone’s guess how the Tec CTL was identified given that little is known about it, even in the international space. Tec CTL has no profile nor established track record of its capacity to deliver at the level of demand that is expected of it by Oil Botswana. Its website provides no previous history of past engagements or achievements.

Speaking to The Business Weekly & Review, Khama provides scant detail on the background of the company while he was effusive about the future, He says they are looking to engage in four projects in Botswana which have the capacity to produce a total of 80,000 BPD and the cutting edge technology in its exploration, development and production of Oil, Gas and Chemicals from its operations.

Insiders at Botswana Oil have questioned how the company with such little presence in the industry was selected, and why a tender process was not engaged in, unless the company had been had been become previously aware of inside information that Botswana Oil was seeking a suitable partner in this instance.

Tec CTL approached Botswana Oil, prior to their being public knowledge of the contract and committed itself to the transaction in the coming months. Botswana Oil operates in the wholesale space and remains open to source product from suppliers, local or international if they meet the parastatal’s conditions.

Government is unable to finance the development of CTL at this stage, which requires an investment of approximately $4 billion for a plant that meets the country’s petroleum products demand. The tender was an inevitable requirement but it appears Tec CTL was positioned to claim the job. The parties had agreed to negotiate an off-take agreement over the coming months, International media has reported.

While dismissing the agreement, Botswana Oil, Stakeholder Relations Manager, Matida Mmipi said all procurement is subject to the Company’s procurement policies and guidelines.

When the news broke that Tec CTL had struck an agreement, insiders point out, Botswana Oil was caught unaware. They indicate that management was forced extend the tender to the public domain for fear of embarrassment. The pre-qualification tender which came immediately after local media got wind of the agreement is currently in the media and on the BOL website. The criteria for the tender matches the prerequisite requirements already given to Tec CTL.

Khama said Botswana Oil had made it clear in the letter that there were a certain number of conditions that had to be met first, among other things they include ecologically sound processes, suitable quality and competitive pricing. “This was an encouraging response to Tec CTL as a technological advanced, ready and capable producer of fuel from Botswana’s ample coal reserves.”

In defense of the letter, Mmipi said traditionally they receive many unsolicited proposals from emerging companies in the oil and gas industry that aspire to venture into the coal to liquid industry. Against this background, she says BOL’s response letter to the proposals is standard, stating that BOL supports the companies’ initiative in principle and conditionally offers offtake on their product refined from a local plant on conditions that include, but are not limited to: Their product meeting the local petroleum products specifications, consistency and sustainable quantities of the petroleum products at any given point in time, that the project adheres to environmentally friendly practices to minimize greenhouse emissions price affordability.

Mmipi, however, would not share with this publication other companies that have benefitted from this dispensation. She was not prepared to tell The Business Weekly & Review the number of proposal they received, from which companies and the responses given to these companies when asked. Instead she chose to tell The Business Weekly & Review, Botswana Oil is aggressively promoting the development of CTL as it brings immense benefits for the country, including; creation of jobs (estimated at 4000-5000), self-sufficiency and potential for exports (use of local coal for production of petroleum products replacing imports), creation of newer industries and educational opportunities (chemistry and related courses).

Tec CTL announced that their deal with Botswana Oil represents approximately 25 percent of the expected average annual production from total projects, which could generate well above $350 million in annual revenue based on current oil prices. The current average price is around US$40pb and a combination of fixed and market-related pricing with attractive floors and ceilings is under discussion in order to secure positive margins in the early years of production, says Khama in the public statement released a few weeks ago. He added that the opportunity to actively participate in a new industry for Botswana was part of the reasoning behind the decision to enter the local market. “We identified an opportunity to take a significant role in the development of the Country’s second city, Francistown; which is where they envision basing our core operations.”

Khama says they are currently negotiating other off-take agreements with other potential off-take partners that will see a total of 80,000 bpd being purchased from the 4 Botswana plants by 2019, adding that this would translate to a total of at least $1.4 billion in annual revenue.