Govt to 'top up' BPC shortfall

Brian Benza
Staff Writer | Tuesday April 20, 2010 00:00

 

Announcing the average 30 percent increase in power tariffs in Gaborone last week, the Minister of Minerals, Energy and Water Resources, Ponatshego Kedikilwe, said the BPC has been registering operating losses for the past four years and there is need for the Corporation to sustain its operations.

The minister said that although the 30 percent increase effective May 1, will go a long way in trying to raise financial resources for the struggling power utility, Government will still need to inject some cash into the Corporation. ' A lower tariffs adjustment requires a proportionate cash injection from the government, a move which is, in the long term, not sustainable to the national balance sheet especially that a deficit budget is forecast for the next couple of years. Accordingly, a 30 percent adjustment was arrived at after agonising on the difficult choices,' said Kedikilwe.  The minister added that, in coming up with the new tariff levels, they also considered factors such as the social impacts, attraction of investors, recovery from recession and sustenance of the BPC operations. According to the minister, for customers in the domestic consumer category using less than 200kWh per month; whose current electricity bill is less than P100, the tariff increase will be 15 percent. As for those using more than 200kWh per month, the increase will be 30 percent.

'For customers in the small business category, those using less than 500kWh per month; whose current bill is less than P260, the tariff will be increased by 15 percent. For those using more than 500kWh per month, the tariff increase will be 30 percent.'  Consumers in the medium and large business categories will also see an average 30 percent increase. However, the minimum amount of capacity that such customers have to pay for has been reduced by 10 percent from 90 to 80 percent.  Electricity tariffs were last reviewed in January 2008 and since then, BPC has struggled with a spike in the cost of imported power, higher materials charges as well as the heavy burden of sustaining its 1900 workforce. In an interview with Mmegi recently, BPC CEO Jacob Raleru pointed out that without the tariff review, the power parastatal will run the risk of failing to meet its operational costs in the short term as well as complicating its funding from the World Bank with regard to the P11 billion expansion of Morupule Power Station.

The BPC also needs investment of up to P500 million to be able to maintain its existing plant at Morupule as well as associated network infrastructure. However, inspite of the capital injection and the tariffs increase, there are fears that the BPC operation inefficiencies will still leak resources from the Corporation's coffers.  BPC unbundled in 2008 setting up Strategic Business Units, which were meant to improve operational efficiencies, but the fruits of that exercise are yet to be seen.