Thursday, July 7, 2022

BPC hikes electricity tariffs as Morupule B fails

The ripple effects of the Morupule B power project bungling are beginning to be felt as the Botswana Power Corporation (BPC) hikes electricity tariffs beginning next month, coupled with an undisclosed bailout it received from the government.

Repeated attempts to get hold of the Minister of Minerals, Energy and Water Affairs, Kitso Mokaila, to seek clarity on allegations that the Morupule B project’s “badly constructed┬áfinancial┬ástructuring plan” is causing headaches both at BPC and the Enclave hit a snag by press time.

The BPC’s Marketing & Communications Manager, Spencer Moreri, would not state how much in ”subsidy cash injection” the power utility received from government while announcing new electricity tariffs. He said his Ministry would be better placed to offer the information.

The Permanent Secretary in the Ministry of Minerals, Energy and Water Resources, Boikobo Paya, did not readily have the amount in figures either by the time of going to press.

“To assist Botswana Power Corporation (BPC) to move towards an acceptable recovery level of efficient costs, Government has approved a combination of an adjustment to existing tariffs, and a subsidy cash injection to BPC. The latter has been done in order to reduce the burden of high tariff adjustments on both domestic and business electricity consumers,” the BPC said in a media statement issued on Monday.

The tariff for domestic customers consuming up to 200kWh (units of electricity) and Small Business customers consuming up to 500kWh will be adjusted upward by seven per cent   seven percent. The tariff for Domestic and Small Business consumption above these levels will be adjusted upward by ten per cent 10 percent. 

Energy and maximum demand (capacity) tariffs for Medium Business customers will be increased by a flat rate of 10 percent.

Energy rates and maximum demand tariffs for Large Business customers will be increased by a flat rate of 10 percent. Energy rates for Government installations will be increased by a flat rate of 20 percent Energy rates for Water Pumping will be increased by a flat rate of 10 percent.

The corporation says administration fee, which covers billing costs and payment of commissions to Electricity Vendors, will be increased from P51.17 to P66.53 for Business and Government users, while for Domestic consumers the increment shall be from P19.12 to P21.98.

An analyst close to BPC issues pointed out that beside the failure of the Morupule B, the┬ácorporation is faced with losses from┬áa badly structured┬á“financial instruments” at a time when they borrowed money from China.

“BPC does not have any choice but to increase tariffs because they are making losses. They borrowed in United States dollars which is fast appreciating in value against the Pula. In the next 10-to- 20 years its financial problems are expected to be worse than now if you were to take the pula devaluation into consideration.

“If you look closely at the problem is not┬ánecessarily that they are buying power at┬áhigh price, rather it is because of the loan,” an analyst said.

The total cost of the project is P 11 billion which P 6 billion or (US $ 850 million)  is from China and the rest from government and World Bank.

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