Saturday, September 19, 2020

When it comes to fuel prices, BERA is a toothless puppy…

By Kabelo Seitshiro

While a look from far could make the Botswana Energy Regulatory Authority (BERA) looks like a big elephant in the room, a closer look will however show that the authority is like a puppy – toothless.

This sentiment is shared by a local economic think tank ÔÇô Econsult Botswana which state in its third quarter economic review of the domestic economy that fuel prices changes in Botswana are still politicized.

“A problematic clause in the BERA ACT, inserted late in the drafting process, requires all of BERA’s pricing or tariff decisions to have ministerial approval. In practice this means Cabinet approval, so even with an “independent” regulator, fuel price regulation is still politicized,” reads part of the Econsult report.

Econsult says besides creating economic distortions and undermining the new regulator, another result of the fuel price policy is to take liquidity out of the banking sector, due to the need for oil importers to borrow heavily.

The inability of government to come up with a coherent strategy regarding increase in global fuel prices is reported to be amongst economic issues that have become more pressing during the third quarter of 2018.

In mid October 2018, BERA clashed with its parent ministry of Energy after the latter made an increase of fuel prices that the newly established authority is reported to be against. Just like BERA, Econsult Botswana has also noted that with oil prices rising on international markets, domestic prices have not been increased sufficiently to cover the cost of oil imports.

Econsult Botswana is also of the view that retail prices of petrol, diesel and paraffin in Botswana are regulated, but not subsidised.  Instead, the economic firm said, the much talked about National Petroleum Fund (NPF) is providing a stabilisation mechanism.  At the same time, the NPF which was set up to cushion its consumers is linked to a scandal relating to funds embezzlement.

The suggestion that the fund is now running dry leaves the beneficiaries, mostly retailers and motorists between a rock and hard place.

RELATED STORIES

Read this week's paper

Sunday Standard September 20 – 26

Digital copy of Sunday Standard issue of September 20 - 26, 2020.