BPC to receive P10bn support
Mbongeni Mguni | Tuesday November 22, 2016 18:00
Last week, Sadique Kebonang told Parliament that between April 2017 and March 2020, the ministry planned to pump P10 billion into the BPC to support it in the absence of cost reflective tariffs.
Kebonang was presenting his ministry’s budget for the National Development Plan 11. “This programme is aimed at subsidising users against high electricity tariffs in order for the BPC to meet its operational costs,” he said.
He added: “In order to encourage economic growth and development, government took a decision to continue with non-reflective tariff charged by BPC to its customers.
“As a result there is need to continuously provide financial support to BPC so that it meets its obligations. This will continue during NDP 11 but the intention is to gradually move to cost reflective tariffs.”
The proposed funding is the latest in years of heavy expenditure on the BPC’s operational costs, with government pumping in P2.3bn in 2015/16, P1.5bn in 2014/15 and P871m in 2013/14, all on tariff subsidies.
According to the BPC’s 2015/16 Annual Report, which is the last available, average tariffs would need to rise by 77% for them to be cost reflective.
The Corporation recently unveiled an ambitious turnaround plan called Masa 2020, under which it expects to initiate a phased approach towards cost-reflective tariffs starting in 2018.
Kebonang’s planned P10 billion expenditure on tariff support and his remarks that “this would continue during NDP 11,” suggest the BPC will miss its Masa target of being financially self-sufficient by 2020.
The latest revelations comes as government begins the task of disinvesting from the problematic Morupule B power station, through a sale to a Chinese state-owned firm.
The BPC has been running operational losses for years, which amounted to P2bn in 2015/16, P1.3bn in 2014/15 and P1.6bn in2013/14.