Moody’s maintains BPC rating despite gov't downgrade
Lewanika Timothy | Monday October 27, 2025 12:28
BPC's credit rating withstood the sovereign downgrade on Botswana’s sovereign rating that was dropped over the weekend due to the country’s weakening fiscal position.
The outlook for BPC, however, remained negative with pressing worries over technical inefficiencies that continued to constrain power production at Morupule B. The 600MW plant has suffered frequent breakdowns since commissioning in 2012, due to design flaws and other weaknesses.
Moody’s said BPC’s rating was sustained by the “very high likelihood” that government would step in if the utility’s financial troubles deepened, given that the Corporation is a state-owned entity.
“BPC's strategic importance and the track record of support from a government with still robust credit quality underpins this rating affirmation,” the rating agency said on Wednesday.
Whilst the credit rating was upheld, BPC’s standalone rating without government support showed a porous financial stance. Moody’s assigned the corporation a B2 Baseline Credit Assessment, a reflection of the corporation’s deteriorating finances when stripped of government support.
Analysts at Moody’s noted that on its own, BPC struggles to cover costs, weighed down by a tariff structure that does not fully reflect the true cost of producing or importing power.
“BPC's standalone credit quality is constrained by the poor asset quality and construction defects that continue to affect output from the coal-fired Morupule B plant, and contribute to a high dependence on contracts for power imports,” analysts at the credit ratings agency said.
The current financial year’s budget estimates show that BPC is due to receive an additional P1.2 billion in tariff and operational subsidies for the 2025–2026 budget.
In the original Transitional National Development Plan (TNDP) which was due to run from April 2023 to March 31, 2025, the BPC was due for a subsidy of P1 billion. However, the corporation in August 2023 secured an extra P1.18 billion through Parliament.
In total, over the TNDP — whose duration was increased to July 31 — the BPC was set to receive P3.38 billion, instead of the original budget of P1 billion.
The risk of a downgrade, however, remained elevated, with the country’s fiscal position remaining under pressure. Moody’s warned that any further weakening of government finances, particularly if it affects liquidity or the willingness to provide subsidies and capital injections, could quickly translate into a lower rating for the utility.
Given BPC’s heavy reliance on state support to cover operating losses and fund investments, a sustained downturn in public finances could strip away its fallback option on government which currently keeps it at investment grade.