INSIDE BPC CEO’S P16M SALARY PACKAGE

INSIDE BPC CEO’S P16M SALARY PACKAGE

As almost 1000 employees of the broke Botswana Power Corporation (BPC) face retrenchment, BPC had a few months before giving its new boss, Dr. Stefan Schwarzfischer an employment contract with a P16 million remuneration package, Staff Writer KEABETSWE NEWEL reports.

2417
0
SHARE
click to advertise here

 

By December last year, chairman of the board of directors at BPC, Sebetlela Sebetlela inked a contract that welcomed a new Chief Executive Officer (CEO) at the troubled corporation. It was not an ordinary contract but an unusual contract, within the borders of Botswana given the figures the financially ailing parastatal was willing to pay. The contract had one eye-catching special condition in it, a Sign-on-fee. The type best known to sports fanatics, where top-ranking strikers are paid millions as ‘sign-on-fees’ when joining a new team.

 

click to advertise here

 
A whopping P1 million is to be given to Dr. Schwarzfischer in cash, just as a sign of gratitude by BPC after the Swiss national accepted a job offer by the power utility service provider. Dr. Schwarzfischer is perhaps the second person in the history of Botswana to be given an employment offer that has a sign-on fee. Less than ten months before Dr. Schwarzfischer signed to receive his P1 million, another man, who was the first to benefit from such an arrangement, received P500 000 more.

 

 
On the 1st January 2016 the South African former Chief Operating Officer (COO) of South African-based Wesizwe Platinum Limited Paul Smith became the first CEO of Botswana Government’s mineral investment platform, the Minerals Development Company Botswana (MDCB).

 

 
On putting his signature on the dotted line Smith, broke records, the figures tell the story. He agreed to approximately P1.5 million as a sign-on fee. He then became the highest paid parastatal CEO, at almost P300 000 per month, the money he has been relishing for more than a year now. This included more than 25 per cent gratuity of the basic salary, payable every year of the four year contract.

 

 
Dr. Schwarzfischer’s salary package bears the hallmarks of Smith’s. The new BPC CEO is also entitled to a third of his gratuity every year, on top of his annual P1 million plus, basic salary. In his first year of employment it appears Dr.Schwarztfischer will pocket P3.3 million. The following years will see him rake in a total of P3.06 million (second year), P3.05 million (third year), P3.1 million (fourth year) and another P3.1 million (fifth year). When his contract ends in the next five years, BPC will have spent a total of P15.8 million on him, and that is not including a 30 percent performance bonus that he will possibly get annually.

 

 
Interestingly, Sebetlela and the BPC board has never ever approved a salary so high for a civil servant in its lifetime, nor has the former board members before him. An exception, for reasons best known to Sebetlela and his board had to be made. The last CEO at BPC, Jacob Raleru, left the employ of the corporation in November last year when Dr. Schwarzfischer took over. Raleru’s basic salary was guided by the BPC pay structure which placed it at under half of what the new CEO gets. Raleru’s basic pay, without allowances was exactly P501 216 per annaum, compared to Dr. Schwarzfischer’s which is as high as P1.2 million. The BPC remuneration policy also does not cater for a ‘sign-on-fee, which has been made as an exceptional case in Dr. Schwarzchfischer’s situation.
The salary package of the current CEO is rather seen in extravagant institutions, not the ‘broke’ BPC which is dependent on state funding. While the current CEO takes home over P3 million annually (including allowances), Raleru was not even close half of that. BPC is a perennial loss making parastatal.

 

 
It incurred a loss of P2.60 billion in 2015 compared to P1, 37 billion in 2014 before a tariff subsidy grant of P2.33 billion. In the year under review, BPC recorded a loss of P274.91 million, compared to P61.5 million recorded in the previous year. The loss arose from the expense of P5.63 billion against the income of P5.36 billion. The income comprised revenue of P2.53 billion, other income of P79.26 billion, tariff subsidy and emergency power grant of P2.33 billion, interest income of P20.59 million and fair value gain on cross currency and interest rate swap of P398.32 million. The expenditure comprised of generation, transmission and other expenses of P380.27 million, finance costs of P170.82 million and net exchange losses of P863.70 million

 

 

While BPC has opened up its purse for the Swiss/German CEO, it is cutting down on its spending on ordinary Batswana employees. Almost two months into office, Dr. Schwarzfischer, who at some point was involved in restructuring Botswana Meat Commission (BMC), has begun a process to kick-out 30 percent of BPC total staff.
On Monday 23 January, the BPC new-broom hosted members of the media at Cresta Hotel and informed them that the troubled Corporation is looking into retrenching more than 200 employees by the end of April 2017. BPC, under Raleru has been contemplating the idea of retrenchments since 2015, but had been cautious to proceed to implement the sensitive matter.

 

 
The total head count at BPC currently stands at approximately 2400. Almost a thousand will face the axe, however 200 will already be gone by April according to the new boss. He said that all executive management positions will be advertised this week, which will see the utility services provider starting retrenchments from the top. Secretary General of Botswana Power Corporation Employees Union is aware of the matter. He said his union has discussed the matter with BPC management. “We are however still negotiating on retrenchment packages,” he advised.

 

 
Schwarzfischer is a qualified Engineer in Metallurgy and Materials holding qualifications which he obtained from the RhineWestphalia Technical University, Aachen. Upon completion of his qualifications whilst still pursuing his PhD he joined Kraftanlagen Heidelberg Inc. as a Project Manager; this was a company that was responsible for construction of nuclear, gas and thermal power plants.

 

 
Whilst employed by KPMG South Africa, Schwarzfischer had the opportunity to be involved in the restructuring exercise for Botswana Meat Commission (BMC).
While local expertise exist within the private sector, no Motswana has ever been offered such a lucrative opportunity.

click to advertise here
SHARE
Previous articleInflation returns to target band
Next articleMachinations for Khama’s Retirement Home
In his generation Newel is one of the most recognisable names in Business journalism. A recent finalist in Media Institute of Southern Africa Media Awards, Newel has written extensively in the boardroom dynamics around public pension funds and related investment interests. His areas of interest are companies and markets, including the financial reports of major companies in the country. Currently he is pursuing the developments around the management contracts for one of Africa’s most lucrative Public Pension Fund, the Botswana Public Officers Public Funds.