Wednesday, September 28, 2022

BPC tariff hike: BERA to decide

The state-owned power distributing monopoly, Botswana Power Corporation (BPC) has made yet another return to the corridors of the Botswana Energy Regulatory Authority (BERA) in search of an approval to hike electricity tariffs.

At a public hearing held this past Thursday, BPC said that the request is guided by its precarious financial position which is a direct result of non-cost reflective tariffs and the increasing cost of imported power.

BPC Chief Financial Officer Oaitse Ramasedi told the BERA public hearing that under normal circumstances the corporation would have proposed a 20 percent hike given the need to attain operational efficiency.

In the latest round to increase costs, BPC is requesting for a 5 percent increase in the 2023/2024 financial year, followed by another 5 percent hike in 2024/25. The new request comes a few months after BERA refused to grant BPC permission to increase prices for the 2022/23 financial year.

At the time, just like this time around, the BPC cited low availability of Morupule B power station which forces it to import power from the region. Morupule B, BPC’s mega power station 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 2021 but that did not materialise. Remedial works on the remaining three units is expected to be completed during 2023.

Meanwhile as the troubled Morupule B power station continues to stabilise, locally produced electricity is also improving contributing positively to power generation and lower power imports, Statistics Botswana (SB) data released recently shows.

The electricity and generation report for 2022 first quarter (Q1: 2022) reveals that the index of Electricity Generation – a key indicator of electricity generation – stood at 151.9 reflecting an increase of 8.2 percent compared to 140.3 recorded during the same period in 2021. The quarter-on-quarter comparison also shows an increase of 36.0 percent, from the index of 111.7 during the fourth quarter of 2021.

The increase has been attributed to improved performance of power generators at the 600 MW Morupule B power station – the country’s biggest power generator powered by four units, and Morupule A. According to the data shared by the state owned data bureau, the two power plants accounted for 98.8 percent of the electricity generated locally during the quarter under review, while Matshelagabedi and Orapa emergency power plants contributed the remaining 0.7 and 0.5 percent respectively.

While the electricity generation data shows that the overall domestic power generation improved, it was not enough to meet total domestic demand, forcing the Botswana Power Corporation (BPC) to meet the shortfall through imports.

The SB report shows that during the first quarter of 2022, the physical volume of imported electricity increased by 3.9 percent (13,753 MWH), from 353,248 MWH during the first quarter of 2021 to 367,001 MWH. Imported electricity during the first quarter of 2022 shows a decrease of 32.5 percent (176,416 MWH), from 543,417 MWH during the fourth quarter of 2021 to 367,001 MWH.

A breakdown of the suppliers shows that South Africa’s Eskom led the pack accounting for 40.2 percent of the power, while the Zambia Electricity Supply Corporation Limited (ZESCO) accounted for 33.2 percent, Electricidade De Mozambique (EDM) 9.9 percent and the Southern African Power Pool (SAPP) supplied 9.0 percent. The remaining 5.6 percent and 2.1 percent were sourced from Cross-border electricity markets and Nampower. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity directly from neighbouring countries such as Namibia and Zambia.

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