BPC warns of deeper losses if tariff prices are not increased
Lewanika Timothy | Tuesday May 26, 2026 10:10
Appearing before the Parliamentary Standing Committee on Statutory Bodies and State Enterprises, BPC CEO, David Kgoboko said the national power utility was facing mounting financial pressure as it continued to sell electricity at prices that do not fully recover the costs of generation, transmission and distribution. He told legislators that the situation was particularly challenging because Botswana increasingly relied on imported electricity purchased at commercial rates from neighbouring countries while domestic tariffs remained amongst the lowest in the region.
'The price at which BPC sells electricity to customers is heavily subsidised and does not cover the cost of generating, transmitting and distributing power,' Kgoboko said. BPC currently imports electricity from South Africa, Namibia, Mozambique and Zambia to supplement domestic generation. According to the CEO, the utility purchases power at prevailing market rates but is unable to recover those costs from consumers under the existing tariff structure. 'If we continue importing electricity under the current tariff structure, we face either deeper losses or more load rationing,' he warned.
The remarks come months after BPC applied to the Botswana Energy Regulatory Authority (BERA) for an average tariff increase of 46%, one of the most significant adjustments sought by the Corporation in recent years. As previously reported by Mmegi, the application includes varying increases across customer categories, with domestic consumers facing some of the highest proposed adjustments as the corporation seeks to move tariffs closer to the actual cost of supply. The proposal has generated significant debate among businesses, households and policymakers concerned about the impact of higher electricity costs on the economy and the cost of living.
However, Kgoboko told Parliament that delaying tariff adjustments has created a growing mismatch between revenue and operating costs. While operational performance has improved in recent years, financial sustainability has continued to deteriorate. He said local generation availability had improved from 30% to 65% over the past five years, reflecting progress in stabilising electricity supply and improving plant performance. Despite these gains, revenue growth has failed to keep pace with rising costs. 'This is primarily due to non-cost-reflective tariffs and the rising cost of power imports, which increased from an average of 85 thebe to P2.60 per kilowatt-hour over the period under review,' Kgoboko said.
The increase in import costs has emerged as one of the biggest pressures on the utility's finances. For years, Botswana has sought to reduce dependence on imported electricity through investments in domestic generation capacity, particularly at Morupule B. While plant performance has improved considerably compared to earlier years when technical failures led to widespread power shortages, the country still relies on imported electricity to meet demand. Those imports have become increasingly expensive as electricity prices across the region have risen. Kgoboko said BPC had repeatedly sought gradual tariff adjustments to avoid imposing sudden price shocks on consumers. The Corporation submits annual tariff applications to the regulator as part of an effort to progressively align electricity prices with the cost of supply. However, he told legislators that only a three percent tariff increase was approved in 2021, after which tariffs remained unchanged for three consecutive years despite rising operating costs.
'The lack of timely tariff adjustments has resulted in a build-up of unrecovered costs, which may necessitate significant corrective measures, including substantial tariff increases, to address shortfalls from prior years,' he said. The comments provide insight into why the corporation is now pursuing a much larger tariff adjustment.BPC argues that years of below-cost tariffs have created a backlog of unrecovered expenses that continue to weigh on its balance sheet. According to Kgoboko, the utility is currently grappling with sustained net losses, liquidity pressures and cash-flow constraints because electricity tariffs recover only between 55% and 60% of the actual cost of supply. 'Each unit sold generates a loss,' he added.
The financial strain has also contributed to growing liabilities. Kgoboko revealed that BPC secured P1.7 billion in external funding during 2024 to settle a backlog of obligations owed to creditors. While the financing provided temporary relief, he said structural challenges had resulted in liabilities building up once again. Creditor balances currently stand at approximately P3.5 billion.