BPC's history-making profits revised up to P700m

Mbongeni Mguni | Friday May 10, 2019 15:36

 

Last June, documents shared with BusinessWeek suggest that the power utility had recorded an estimated P200 million profit, the first in 10 years of multi-billion pula losses.

BPC’s decade of misery was driven by high import costs to cover failure of Morupule B, no-cost reflective tariffs, operational inefficiencies and a spiralling debt book.

The Auditor General’s report, covering the 2017/18 financial year and released on Tuesday, shows that the BPC met its Masa 2020 objective of turning a profit by 2020. 

Masa 2020 is an ambitious strategy adopted by the BPC a few years ago to turn around the troubled utility. According to the Auditor General, Pulane Letebele, the BPC’s history-making profits were anchored by higher sales revenue and lower costs of generation and import.

Former BPC CEO, Stefan Schwarzfischer, who championed the Masa strategy previously told BusinessWeek that improvements at Morupule B would reduce generation costs, lower the need for electricity imports and improve the utility’s books.

“The main contributors to the profitability of the Corporation were the increase of P240.72 million in revenue from P2.77 billion in the previous year to P3.01 billion in the year under review and a decrease of P935.38 million in generation, transmission and distribution expenses from P3.81 billion in the previous year to P2.88 billion in the year under review,” Letebele said.

As a result of the healthier finances, BPC required less government support, with the tariff subsidy dropping from P1.67 billion in the previous year to P1.46 billion in the 2017/18 financial year. Government began pumping tariff subsidies into BPC from 2011 and by 2017, these had amounted to P9.7 billion.

Documents available to BusinessWeek previously suggest ongoing remediation work at Morupule B could lower the country’s power imports to just four percent by 2020.  This is compared to an average of 60% during the worst of the electricity supply crisis, which occurred in recent years. The BPC’s improved supply of electricity has been credited with improved economic growth in 2018 and rosy prospects for 2019.