Govt shaves P2.3bn from BPC subsidy fund

The Tshele Hill project will enhance strategic fuel security
The Tshele Hill project will enhance strategic fuel security

The Botswana Power Corporation (BPC) will have a smaller cushion for any upcoming shortfalls in its finances, after government cut P2.25 billion from its NDP 11 allocation for subsidies.

The funds from the BPC have, instead, been diverted to the Tshele Hills project, which seeks to boost national strategic oil capacity.

While the Kgatleng district project was initially financed through the National Petroleum Fund (NPF), the latter’s depletion, partly by a money laundering scandal, has sent authorities scrambling for funds to finalise the project.

Finance Ministry documents accessed recently show that the BPC had been allocated P9.48 billion for its subsidies under NDP 11, to be tapped into from April 2017 to March 2023.

However, the depletion of the NPF forced government to divert P2.25 billion from this allocation towards the completion of the Tshele Hills project.

“Due to unforeseen financial constraints emanating from depletion of the National Petroleum Fund, the ongoing project activities at Tshele Hills cannot proceed without funding from alternative source,” reads a note accompanying the revised allocations.

In previous years, the diversion of any funds from the BPC’s subsidy fund would have been a huge hit to the Corporation, which for years survived only on government support.

However, in recent years, the power utility’s books have improved and earlier this year, the Auditor General’s report showed that the Corporation had recorded its first profits in a decade of P674 million.

The main contributors to the profitability of the Corporation were increases in revenue, set against a decrease in generation, transmission and distribution expenses, the latter as a result of more output from Morupule B.

In previous years, government pumped billions into the BPC by way of tariff support, from P871 million in 2013/14, P1.5bn in 2014/15, P2.3bn in 2015/16 and P1.7 billion in 2016/17.

The diversion means the Tshele Hills project again resumes, with a focus on development of the access road and rail spur to the site.

The project aims to increase the country’s strategic oil reserve from the current 18 days to 60 days equivalent of national consumption.

Originally, the project was expected complete by December 2020. It is now due by March 2023.

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