Power tariffs go up

MBONGENI MGUNI
Staff Writer | Tuesday May 17, 2011 00:00

 

The announcement confirms a Mmegi exclusive in February where highly-placed BPC executives revealed the utility was pushing for a 30 percent increase in tariffs this year. According to yesterday's announcement, tariffs for large users - from where the BPC earns most of its revenue - will rise by 30 percent from 01 June 2011. This category includes medium and large business, government and water pumping.

Domestic and small business customers will face a 15 percent increase although this will rise to 30 percent for electricity consumption above the 200 kilowatt per hour and 500 kilowatt per hour (kWh) levels.

For illustration, an average household in Gaborone would likely consume more than 200 kWh, with the geyser leading usage, followed by fridges and freezers, personal computers, lighting and other devices according to the period of use.

Hinting that the June increment is only the tip of the iceberg, Ministry of Minerals, Energy and Water Resources officials described it as an 'interim adjustment' and revealed that a 70 percent increase would have been required to put the BPC on a firm financial footing.

They said for the year ended March 2011, the BPC paid 71 thebe per kWh supplied to the economy, while charging customers 47 thebe. 'The law requires that BPC charges cost-reflective tariffs in order to meet its operation and maintenance costs, invest in new infrastructure, replace or upgrade infrastructure, pay its debts, and pay shareholder dividends,' reads the announcement. 'More than fifty percent of BPC's operating costs goes towards the importation of electricity. During the 2011/12 financial year, BPC is expected to pay, on average, P110 million a month towards the purchase of electricity from regional trading partners.'

Ministry officials stressed the various initiatives government has taken to support the BPC and ameliorate the need for and level of tariff increases. These include subsidies of nearly one billion Pula paid to the BPC, cost of diesel-based emergency power in Matshelagabedi and Orapa and the P5.55 billion equity funding for Morupule B.

Government has also underwritten the P5.55 billion BPC is borrowing for the project which the utility is required to begin repaying in 2012, after the power station comes into commercial operation.

Officials stressed that the P508 million subsidy allocated to BPC for 2011/12 and the P454 million paid last year, were designed to 'enable a gradual ramping up of the tariffs.'

'Government has, over time, always sought to balance the need for BPC to have cost-reflective tariffs and the role of electricity in facilitating socio-economic development. For this reason, in previous years, government has waived the requirement for dividend payments by BPC,' reads the announcement.

'The government will continue to take measures to keep electricity prices to the bare minimum possible, through demanding improved operating efficiencies by BPC and overall cost-reduction.'

The latest announcements are in line with information unearthed by Mmegi earlier this year, suggesting that the Ministry of Minerals, Energy and Water Resources planned to approach Cabinet for an average 25 percent increase this year and another 25 percent rise next year.

In a previous interview, BPC Chief Executive Officer, Jacob Raleru, said tariffs would have to be continuously adjusted over three years to return the utility to commercial operation.