Monday, June 1, 2020

New electricity tariffs kick in April

The ripple effects of Botswana Power Corporation’s Morupule B power project bungling are beginning to be felt as a hikes of electricity tariffs kick in next month (April). 

On Wednesday, Botswana Energy Regulatory Authority (BERA), announced that the Mineral Resources, Green Technology and Energy Security has approved the price increase which was requested by the struggling Botswana Power Corporation (BPC).

BERA said that electricity prices will go up by 22 percent next month in a revelation that has stunned consumers who are gripped by the coronavirus uncertainty. 

BPC last adjusted its electricity tariff in 2018, hiking it by 10 percent to bring prices to 97 thebe per kilowatt hour (kwh). The recent increase means electricity will now cost consumers roughly P1.18 per kilowatt hour (kwh). 

The state-owned power monopoly has been pressing on government to adjust its tariff to at least P1.30 per kilowatt hour (kwh), which will be equivalent to the cost BPC incurs in suppling the power. It was reported last year that government turned down BPC’s request for further increases, fearing backlash during the election year. 

However, it appears the government had little choice this year but to approve the 22 percent increase requested by BPC following several developments. For starters, BPC is struggling to generate domestic electricity due to Morupule B power station which has failed to operate at capacity since it was commissioned. 

The contractor, China National Electric Engineering Company (CNEEC SBW), clinched the $970 million (P10.6 billion) contract to build the 600MW Morupule B power station in 2010, with the completion date set for 2012. However, the project took longer than expected, and ten years later, the country’s biggest coal powered station still needs some remedial work to make it fully functional.

The remedial works are being done at the contractor’s costs since June 2019 and was expected to end in January 2013.  However, the outbreak of the coronavirus has been singled as the biggest risk to fixing Morupule B in the scheduled period after the virus outbreak has affected global supply and movements.

On the other hand, the government is feeling the pressure of subsidizing its struggling parastatals due to huge budget deficits. During the budget presentation speech in February, the country’s minister of Finance and Economic Development, Dr. Thapelo Matsheka, said government will cut down on costs while raising levies and prices for some government supplied services. 

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