Thursday, August 6, 2020

Dysfunctional Morupule B comes back to haunt energy consumers

If he is in any way touched by the 22 percent tariff in electricity, then Minister Lefoko Moagi is not showing it.

Like a doctor prescribing bitter medicine knowing fully well that it is what it will take to save the patient, Moagi chooses to be philosophical in his defence and justification of the price hike.

“it is not a nice thing. But we also have to know what the alternatives are,” is how he opens his short and concise defence of the price increase.

Last week Moagi became what nobody in his position would wish for in a time of a crisis; the bearer of bad news.

Coming at a time when everybody is seized with the global fight against coronavirus that has rattled nations, electricity price increase might seem a bit insensitive – even callous, but state entities under Moagi’s ministry were in a hurry to announce the tariff increase.

So urgent was the increase that apparently the minister was not in a position to even delay the announcement to allow fight against coronavirus to pass.

“There is no better time to increase prices,” he said from his office when addressing a makeshift press conference that had been hastily assembled.

He was clearly aware of the bad timing and more importantly the implications for the government.

His firm view is that the decision could not wait any longer.

Botswana Power Corporation, the defecto monopoly power utility in Botswana is currently hard pressed for cash. The crisis is growing. And unless government internes with a substantial lifeboat the corporation will not be able to honour its obligations.

The corporation had asked for P900 million in subsidy from government.

When the budget came out, only P500 subvention was issued.

It is a shortfall that threatens the life of BPC, not least because it is not the first experience of a decline in government help.

Over the years government has been systematically weaning off BPC by cutting its subsidy and urging the power utility to stand on its own.

The incremental reduction in government support from its height currently sits at a low ebb of 111 percent. It is a big reduction with huge, snowballing consequences.

Moagi holds a view that if there is no increase in tariffs by BPC, the lights will ultimately just go off.

In other words, without these steep tariff increase, the viability of BPC increasingly grows suspect.

He concedes that the increase might be “unpalatable” to some people.

But adds that “the alternative is that there will be no power. I see this as a reason why we have to do it. Without power people in hospitals will be affected as will be water supply.”

The tariff to be implemented by Botswana Power Corporation were at the instance of the regulatory authority – BERA (Botswana Energy Regulatory authority.

They were announced in a statement that left the public aghast – at its timing, but also its sheer magnitude.

Minister Moagi is bluntly honesty on the causes of the huge tariff increase.

He allays fears that increase has got anything to do with what some have linked to inefficiencies at BPC.

Rather, he says the increase is long overdue, a result of historical hangovers linked to inordinate delays to bring Morupule B online.

The situation has not been helped by unrelated delays to diversify and broaden Botswana’s energy base through the introduction of renewables.

While contracts for construction of renewables have previously had to be postponed, it is Morupule B that has been an economic sore for Botswana.

“Morupule B has not performed,” he says. It is a glaring understatement about a dysfunctional piece of machinery that has become a legend.

Such failures are now reaching directly into the pockets of ordinary Batswana who will in no time be paying through their noses to use electricity.

The power station was touted as a huge investment to make Botswana an energy self-sufficient country. Many years after it was supposed to have been delivered, the contractor is still logged at the sight to make the power station work.

“The contractor is doing remedial work,” said Moagi.

It will be years before Morupule B is fully functional – if ever.

Meanwhile, with Government steadfastly cutting down their subsidy to BPC, the 22 percent increase in tariffs is unlikely to be the last.

Even in the face of such gloom, Moagi remains hopeful.

“Morupule B was supposed by now to be absorbing the power deficit. The contractor is remediating. We’re expecting the work to be fully done by 2023,” he said.

Botswana’s energy deficit continues to grow substantially.

The stopgap has been to negotiate an agreement with South African power utility, Eskom.

While the Eskom agreement kind of guarantees Botswana energy when it is needed, such guarantees come at an exceedingly high cost.

Botswana spends between P200 million and P250 million a month as cost for importing power from Eskom.

The long-promised renewables are yet to come on line.

Moagi hopes to have issued contracts for at least two solar power renewables.

Once completed they are expected to feed into the national grid.

But the costs related to energy storage for solar generated power are proving a latest headache.

Only time will tell how long Moagi remains calm.


Read this week's paper

Sunday Standard August 2 – 8

Digital copy of Sunday Standard issue of August 2 - 8, 2020.