The pain of tariff hikes
Mmegi Editor | Thursday April 9, 2015 15:26
The Botswana Power Corporation (BPC) received yet another tariff increase, with households set to pay between 7.5 and 10 percent more for electricity, a commodity that has become as scarce as it is costly.
Over the years, electricity tariffs for households have risen from 25.3 thebe per kilowatt-hour to 70 thebe before the latest increases. And they are still not cost reflective, meaning the Corporation makes a loss every time it supplies a single unit of power.
Most right-thinking consumers understand this. They understand that over the years, price growth of inputs such as labour, fuel and maintenance costs have necessitated higher tariffs. Some of the more pragmatic may even be able to accept that a continuous push towards cost-reflective tariffs trumps political ideals such as rock-bottom power prices when greater, sustainable economic growth is considered.
What none, however, is willing to live with is a situation where the BPC and its policymaking handlers continue to enjoy blanket inculpability to the public purse for the billions of Pula that the utility has been lavished with over the years. For 2015/16 alone, P1.5 billion will be paid to the Corporation as a tariff subsidy, following P1.5 billion last year, P871 million in 2012, P508 million in 2011 and P454 million in 2010. Chiefly, what chafes consumers about these subsidies is that they are the result of the catastrophe that has been the development of the P11 billion Morupule B power station. Had that station been completed on time and within budget, the local economy would not have had to import costly electricity from South Africa, some of it on an auction basis where the tariff paid is at a premium. The economy would also not have had to endure the vicissitudes of relying on the Southern African Power Pool for the majority of its electricity supplies and for the stability of the cost.
And most importantly, the economy would not have suffered nor have to continue enduring the opportunity costs associated with the supply of expensive imports and equally expensive diesel emergency power from Orapa and Matshelagabedi.
The delay by government in successfully retrieving the funds contractually owed to Batswana by the Morupule B contractor is certainly a sore point for many who are now being asked to shell out even more for electricity. With the eagerly awaited Botswana Energy and Water Authority yet to hit the ground, consumers are increasingly unable to comprehend why they are required to pay more and more for a product that is less and less available. As long as the mess around Morupule B remains unsolved, no clear resolution to the power crisis will be found.
Today’s thought
“A person may cause evil to others not only by his actions but by his inaction, and in either case he is justly accountable to them for the injury.”
- John Stuart Mill