BPC bounces back to profits, targets higher exports
Pauline Dikuelo | Friday June 29, 2018 18:00
Documents shared with BusinessWeek indicate that powered by Morupule B, local generation ballooned to 81% last year, the strongest in the years since the 2008 power crisis. Imports accounted for only 19% of power consumed in 2017/18.
Preliminary numbers sourced by BusinessWeek suggest the BPC posted a P200 million profit for 2017/18, a huge leap from a P140.3 million loss in 2016/17. The profit is the first since 2008, when a regional power crisis saw the BPC slump to losses which peaked at P1.6 billion in 2010. The losses triggered government subsidies from 2011 that by last year had amounted to P9.7 billion.
In 2016/17, the BPC’s import costs fell 21% to P1.5 billion and the trend continued in 2017/18, powered by Morupule B’s availability which rose to 70% from 56%.
Morupule B’s increased performance stems from ongoing remediation works, funded by the Chinese contractor as part of contractual obligations.
“BPC is on track to achieving its Masa 2020 target of returning to profitability which will ultimately result in the Corporation being independent of government subsidy,” documents seen by BusinessWeek indicate.
The documents indicate that the BPC plans to reduce its power imports to four percent and boost internal generation to 96%, starting from 2020.
Directors writing in the Corporation’s recently released 2017 Annual Report said Morupule B’s higher availability would ensure that local demand is met, while excess power will be sold into the Southern African Power Pool, improving the Corporation’s revenue.
BPC will directly benefit from the improved Morupule B, after government abandoned plans to sell the station earlier this month. .
Information reaching BusinessWeek indicates that talks broke down largely due to differences over the offer submitted by the Chinese for the power station.
The two parties had already clashed over terms of the deal where government wanted the Chinese contractor to commit to using non-Chinese material for the remedial works at the power station.
Built at a cost of P11 billion, Morupule B by last year had cost overruns estimated at P4 billion, with a root cause analysis placing the majority of the blame on the Chinese company, known as CNEEC.
The deal to sell the power plant began in 2016 and had been passed to the Public Procurement and Asset Disposal Board (PPADB).