Power tariffs to go up next month #PowerCrisis
Brian Benza | Wednesday March 12, 2014 14:59
Addressing parliamentarians on Monday, Minerals, Energy and Water Resources minister Kitso Mokaila said the power utility is losing about 50 thebe of each unit of power sold. This is due to tariffs that are not cost reflective.
“Notwithstanding the operational challenges that BPC is facing, it is also true to say the electricity tariffs are not cost reflective. To this end tariffs will be adjusted by an average 10% with effect from the 1st of April,” he said.
However to cater for low-income households and small industries, Mokaila said the increases on the first 200 units and 500 units will be 5 and 6 percent respectively.
BPC charges about 57 thebe per unit for domestic consumption that is below 200 KW per hour. This increases to 75 thebe if consumption rises above 200kwh.
Power tariffs were last adjusted by between seven and 20% last year after a two-year freeze. This year’s increment comes at a time when Botswana is facing power shortages of upto 12 hours a day leading to massive inconveniences and losses for both households and businesses. Hopes of having sufficient power supply have been momentarily shattered with delays in completing the multi-billion pula Morupule B Power project, while shortages in South Africa have also put pressure on Eskom to cut down exports to Botswana, exacerbating the local supply-demand gap.
BPC has perennially suffered heavy operating losses, standing at P311 million in 2012, largely on the back of the huge import bill coupled with tariffs that are not cost reflective. The law requires that BPC charges cost-reflective tariffs in order to meet its operation and maintenance costs, invest in new infrastructure. But government has been reluctant to increase the tariffs regularly in an effort to lessen the burden on the consumers. Instead, government has been subsidising the operations of the power utility to cushion the costs of supplying power at below cost tariffs.
Morupule B’s four units were supposed to be generating 600MW by October 2012, but adverse weather, followed by a series of technical failures, and delayed finalisation of the fast-tracked plant.
At present, only one unit is operational forcing BPC to seek emergency power from Eskom as well as from the country’s two diesel-fuelled power peaking plants.
Industry experts estimate that diesel powered turbines such as at the 90MW Orapa power station can consume up to 22,000 litres of diesel per hour. In 2014, Government will pump another P2,05 billion into the troubled Botswana Power Corporation (BPC). The boost will add onto last year’s outlay of P1.5 billion as the crises created by delays at Morupule B weigh ever heavier on the economy.
Last year BPC finances took up the lion’s share of both the initial and supplementary budgets and will this year gobble up to 16% of the development budget despite the negative growth resulting from cost of inputs exceeding the value of sales.
Presenting the budget estimates for the 2014/15 financial year in Gaborone last month, Finance minister Kenneth Matambo said that P1.5 billion of the planned allocation will be directed towards operation and maintenance of the Morupule B plant, while P140 million will cater for emergency power supplies.
Another P1.1 billion is expected to go towards the refurbishment of the old 120 mw Morupule A Power Plant.
In the 2012/13 the BPC received P540 million towards its Eskom bills and P330 million for its Morupule Coal Mine obligations, while in the 2011/12 financial year, the corporation received P454 million in cash injections.