Electricity consumers in Botswana can expect a double-blow from the Botswana Power Corporation (BPC) following a Presidential Directive that seeks to hike the National Electricity Levy. A letter dated 24 January 2022, addressed from Ellen Madisa – PS at Energy Ministry to BPC Chief Executive David Kgoboko bears the sad news.
According to the letter, the government through a Presidential Directive CAB 25 (A) 2021dated 15th December 2021 has approved the request to adjust amongst other things the National Electricity Fund (NEF) levy rate from P0.05 to P0.10 per Kilowatt. The letter also directed the BPC CEO to initiate implementation of the directive from the 1st of February.
“The Botswana Power Corporation is urged to adhere to the NEF Order which states that the levy collected should be remitted to the Fund on monthly basis”, reads part of Madisa’s letter to Kgoboko.
The hike of the NEF levy is expected to be followed by 5 percent electricity tariff increase that the corporation plans to implement by April this year.
BPC says the new tariff proposal for the financial year 2022/23 is based on the yearly determination of the required revenue to meet the operating, maintenance and financing costs of the Corporation.
“The proposal also considered future energy demands especially from Large Power Users such as mines”, says BPC.
The new request comes a year after BERA granted BPC permission to increase prices by 3 percent in April 2021 which was lower than the 5 percent initially sought by the state power company. In 2020, BPC drew a wave of criticism after increasing power tariffs by 22 percent amid a pandemic. The power supplier says it requires a healthy liquidity position to undertake overdue refurbishment of its transmission and distribution infrastructure.
In pushing for additional increments to tariffs, BPC says its weakened financial position can be traced to the non-cost reflective charges, with other operational losses made worse by the defective Morupule B power station, which has led to high cost of imported electricity.
BPC’s parent ministry – Green Technology and Energy has also in the past indicated that the corporation is facing major power supply disruptions mainly caused by maintenance backlog accumulated over the years, aging infrastructure, and network overloads where demand is outstripping network capacity.
In a bid to improve service, BPC has already embarked on the maintenance catch up programme meant to clear a maintenance backlog accumulated over the years and network overloads that result in power interruptions in some parts of the country. The backlog includes replacing rotten poles, servitude maintenance and uprating of distribution infrastructure. The exercise is undertaken in a three (3) phased approach. Phase 1 commenced in 2018 and has been completed at P250 million, while Phase 2 estimated at P240 million is currently on-going and scheduled for completion in July 2021 and the last phase estimated at P160m is planned to start in May 2021 for 11 months duration.
On the other end, the Energy ministry has started implementation of the rooftop solar programme into the grid following guidelines introduced last year November for end users who can generate their own electricity and sell excess to BPC. The development of these included applicable rules, regulations, standards, tariffs as well as a review of implementation processes.
The Rooftop Solar Programme will run for a period of 3 years, with the system-wide aggregate capacity of 10MW in the first 12 months. The ministry has also developed an Integrated Resource Plan for Electricity Generation (IRP) to establish a robust electricity generation build programme from 2020 until 2040.
Currently about sixty percent of the national electricity demand of 600MW is being met from domestic generation facilities, Morupule A and B, while the balance is imported from other power utilities in the Southern African Pool (SAPP).
The 600MW Morupule B coal power plant is currently undergoing comprehensive defects remedial works to address the perennial boiler failures. The plant 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.