The electricity utility, Botswana Power Corporation, has blamed the blackouts on weather-related faults, but this belies the troubles bedevilling the corporation which are contributing to these faults. In its current model, BPC is statutorily set up to fail. Via it's the law that establishes and regulates it, it is required to operate as a continuing enterprise and yet its revenues are capped by tariffs that are way off operating costs.
Add to this the annual maintenance and replacement costs associated with its mammoth infrastructural backbone, repayments of billions of pula for Morupule B and frequent increases in the costs of imported power. BPC posted a loss of P607 million in 2010/11 and of P563.6 million in 2009/10, deficits that had to be eased by millions more in government subsidies. For the 2011/12 financial year, BPC has projected a loss of P87 million, a situation also helped by a P500 million subsidy. For 2012, BPC reportedly received P400m in government support, but it is headed for a bigger loss due to costs associated with expensive imported power and the Morupule B project. Through the period, tariffs rose by between 15 percent and 30 percent and while executives are tight-lipped on the issue, it is known that current rates are lower than the cost of imported power. From the mass of numbers, a clear picture emerges. The BPC cannot run as a continuing enterprise due to the simplest of mathematics - the costs of its inputs and operations are higher than its revenues. Subsidy support is clearly as unsustainable as a fire made of and kept ablaze by sticks of matches! The bottom line is that this corporation needs a strategic overhaul and quickly. An attempt of sorts towards this was made years ago when it was partly unbundled into strategic business units such as transmission, generation and corporate. However, all these units are still financed by BPC, report to it and are organisationally indistinguishable from the body proper.At present, BPC generates electricity, secures a tariff for it, distributes it and bills as well, a situation akin to a referee playing in a football match while also running the league. An overhaul would have to include removing generation and transmission and establishing these as continuing enterprises in their own right. As has been done with Botswana Telecommunications Corporation, BPC should be removed from its infrastructural backbone which consists of its generation and transmission assets.BPC could then procure power and transmission from these entities, while upcoming Independent Power Producers could also procure transmission from the new entity. This is more or less the model used in more developed economies and is only one of many strategic overhauls that could supply affordable and sustainable power for the growth of the economy.
