Financial Economist at FinMark Trust, Othata Batsetswe, has said government should consider halting the 10 percent electricity tariff increase as it will further cripple businesses and households which are “still coming out of the darkness.”
Batsetswe was responding to government decision to adjust electricity tariffs by an average of 10 percent with effect 1 April 2014 in an interview with The Telegraph.
The outspoken economist said that before the government increase electricity tariffs, it should allow households and businesses to recover from losses incurred during the power outages which started few weeks ago.
“Businesses lost about P40 billion in outputs during power cuts and still are trying to recover from these losses….Some households also lost appliances when electricity was being cut. So government should consider halting the tariff increase first so that businesses and household may recover,” said Batsetswe.
He said as Batswana are not an “insuring nation” many would take time to recover their household appliances which were damaged by power cuts.
Batsetswe who is also a Financial Inclusion Specialist & Project Coordinator at FinMark said if government increases tariffs by 10 percent, many companies will be forced to retrench as they have already suffered a huge financial blow from the recent power outages. He said this can affect the economy very bad, therefore government should be considerate in its decision.
Batsetswe said though the tariff increase might not hike inflation, as it might still fall within Bank of Botswana’s (BoB) objective range of three to six per cent even after increase, the urban population is going to feel the pinch of this increase. Inflation is currently at 4.4 percent after a slight rise in January but Batsetswe said it is unlikely to exceed the objective range of the Central Bank after the tariff increase.
Last week Minister of Minerals, Energy and Water Resources, Kitso Mokaila, told parliament that the state-owned power utility has been making financial losses as a result of charges that are not ‘cost reflective,’ hence government’s decision to increase tariffs.
The minister said to cater for low income household and small industries, the increases on the first 200 Units and 500 Units will be 5 percent and 6 percent respectively.