Saturday, July 31, 2021

BPC is back, and this time demanding more charges

The Botswana Power Corporation (BPC) is back again, requesting government to approve its plans to hike electricity costs.

On Friday, Botswana Energy Regulatory Authority (BERA) announced that BPC has put in a request to increase tariffs for the next two years. The state-owned power distributing monopoly said its precarious financial position is the result of non-cost reflective tariffs, low availability of Morupule B power station and the increasing cost of imported power.

In the latest round to increase costs, BPC is requesting for a 5 percent increase in the 2022/2023 financial year, followed by a 3 percent hike in 2023/24. The new request comes three months later after BERA granted BPC permission to increase prices by 3 percent in April, which was lower than the 5 percent initially sought by the state power company.

In 2020, BPC drew a wave of criticism after increasing power tariffs by 22 percent amid a pandemic. The power supplier says it requires a healthy liquidity position to undertake overdue refurbishment of its transmission and distribution infrastructure.

The Mineral Resources, Green Technology and Energy minister, Lefoko Moagi, earlier this year said BPC is facing major power supply disruptions mainly caused by maintenance backlog accumulated over the years, aging infrastructure, and network overloads where demand is outstripping network capacity.

BPC says the nation’s mega power station Morupule B performed badly in 2020/21 financial year, with an availability rate of 29 percent, due to delays to the commissioning of Unit 4 which is still undergoing remedial works at the contractor’s expense.

The 600MW coal powered plant was commissioned in 2012, gobbling nearly P10 billion, but has never been fully functional, with only half of the four units functioning most at a time. Remedial works commenced in June 2019 on Unit 4 and was scheduled to return to operation in July but that has not materialised. Remedial works on the remaining three units is expected to be completed in the first quarter of 2023.

Despite challenges, the amount of electricity produced in the country improved in the first three months of the year with the troublesome Morupule B sputtering to life.

Statistics Botswana’s latest data on electricity generation and distribution in the first quarter of 2021 was powered by improvement from the major power plant. According to the report, the Index of Electricity Generation (IEG) stood at 140.3 during the first quarter, up by 22.4 percent from the same period in 2020. The quarter-on-quarter comparison shows an increase of 14 percent.

Local electricity generation increased from 517,627 MWH during the fourth quarter of 2020 to 589,899 MWH during the period under review, higher than 2020’s Q1 generation of 481,984 MWH.

As domestic production improved, the volume of imported electricity declined by 3.3 percent from 529,352 MWH during the first quarter of 2020 to 353,248 MWH during 2021 Q1. Compared to the previous quarter, imported electricity during the first quarter of 2021 was down by 24.1 percent from the fourth quarter of 2020.

Electricity distributed in the first three months of 2021 was 943,147 MWH, a 6.7 percent decrease from 2020 Q1’s 1,011,335 MWH. Electricity generated locally contributed 62.5 percent to electricity distributed during the first quarter of 2021, compared to a contribution of 47.7 percent during the same quarter in 2020.

Botswana imported 37.5 percent of total electricity distributed, with Eskom as the main source of imported electricity at 65.1 percent of total electricity imports. The Southern African Power Pool (SAPP) accounted for 22.1 percent, while the remaining 7.4 and 5.4 percent were sourced from Nampower and Cross-border electricity markets.

A quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed increased by 9.9 percentage points compared to the 52.6 percent contribution of locally generated electricity during the fourth quarter of 2020.

The improvement in the first quarter of 2021 is a stark contrast to the three-year decline in domestic electricity generation, leading to increased imports which have Botswana Power Corporation (BPC) to increase tariffs.

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