Saturday, October 24, 2020

Mokaila throws down the gauntlet

The Minister of Minerals, Energy and Water Resources, Kitso Mokaila has threatened to pull out from Cabinet if it does not back him in his efforts to create regulatory bodies for both water and energy sectors, Sunday Standard has learnt.

Mokaila has in the past submitted to Cabinet his ministry’s proposals to create the two regulators but was rejected.

It was only after he threatened to resign that Cabinet instructed him to water down his proposals and bring them back for new consideration.

But to his annoyance, what started as his ministry’s initiative inside Cabinet is now being championed as part of flagship policy ideas of the opposition Umbrella for Democratic Change (UDC).

Mokaila is said to be irked that his colleagues did throw their weight behind him when he brought forward the proposals.

The Deputy President of the UDC, Ndaba Gaolathe, has now moved full speed with a motion in Parliament to establish exactly the kind of bodies that Cabinet rejected when Mokaila brought them before it.

Gaolathe, who is also a Member of Parliament for Gaborone Bonnington South has, tabled a motion seeking to establish regulatory frameworks for water, electricity and other energy forms.

To his credit, Mokaila is so far the one from the BDP side who is openly supporting Gaolathe’s motion.

The regulatory framework for the named utilities has in the past also been mentioned in the budget response by Leader of Opposition, Duma Boko.

According to Gaolathe, establishing such a regulatory framework will stem the loss of money by government at Botswana Power Corporation (BPC) and Water Utilities Corporation.

Gaolathe says any further delays in establishing such regulatory frameworks will also adversely compromise access to water and electricity for low income families.

This is over and above structurally high cost of production of both the power and water

“The absence of a regulator also creates an unpredictable and opaque environment within the energy and water sector, at the expense of meaningful and/or timely investment in these sectors worth billions of Pula, which government cannot be expected to match by quantum or effectiveness.  This means thousands of missed job opportunities,” says Gaolathe.

He reckons that delays in establishing such a regulatory framework always means that Botswana is missing out on an opportunity to be a leader in power sector, which leadership position can create potential for significant export revenues to the tune of billions of Pula.

In a surprise twist, ruling party Members of Parliament have for two consecutive weeks collapsed the quorum every time a decision was due to be taken on the motion.

If the regulators are created, Gaolathe says, they will enhance security and adequacy of supply while also lowering cost of production and retail price of energy and water.

These are the points that are also shared by Mokaila’s Ministry of Minerals, Energy and Water Resources.

According to Gaolathe, establishing such regulatory frameworks will also enhance a wider social inclusion and by itself be incentive for direct and indirect investment into these two sectors.

“To achieve our objectives, we need to concern ourselves with several regulatory domains, for both power and water sectors. These will handle economic regulation, pricing, regulation of monopolies, service and performance standards, licensing and entry, facilitate open access and trade and consumer protection,” said Gaolathe in Parliament.

Gaolathe is also of the view that such a regulatory framework will bring about fairness that is rooted on procedure and evidence of facts.

He adds that decision making processes that are appealable at the courts will be improved.

Additionally, he says such a framework will improve accountability especially for money appropriated by Parliament.

“Regulation alone is of course not adequate.  Regulation should envisage a progressive sector structure and bring out the best in that sector structure, in order to realise the stated objectives.”

He is of the view that the electricity sector operations as dominated by the public utility, the BPC, are not structured efficiently.

“Effectively, BPC is a natural monopoly, poorly run and with a high cost structure. Although Independent Power Producers are allowed, the landscape is too hazy to show how power purchase agreements are negotiated and implemented fairly.  The BPC is involved, but it is conflicted because it is also a power generator,” says Gaolathe.

He says Botswana needs to unbundle vertically ÔÇô separate power generation, power transmission, power distribution, power supply and ancillary services.

“This unbundling is necessary to bring alternative players in some of those spaces. The obvious space that is ripe to accommodate competition is the power generation space, and to some extent the power supply space.  Power transmission is a non-contestable natural monopoly,” he contends.

According to him, the regulator should cover other subsectors such as gas, petroleum and all activities linked to those sectors.

With specific reference to water, Gaolathe is of the view that WUC is a natural monopoly and is doing too much to do anything well.

“It is necessary to break up the sector into various components, along the vertical chain ÔÇô identify various parts of the value chain ÔÇô water resources authorities, bulk conveyance, and water services institutions ÔÇô indentify the natural monopoly parts and the contestable parts.  This would bring out the best out of water regulation,” he says.

He adds that even if BPC and WUC remain as they are it is necessary to regulate price, standards and quality so as to apply pressure on effectiveness and efficiency.

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