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Another power tariff increase looms?

Staff Writer
Electricity consumers should brace for another tariff increase following the approval for Eskom to raise its tariffs by another 13.3 percent on top of the 14 percent approved early this year.

The National Energy Regulator of South Africa on Wednesday allowed Eskom, which provides over 70 percent of Botswana's power needs, to recover additional primary energy costs of R2, 83billion through its electricity tariff, which amounted to a 13,3 percent increase.

The Botswana Power Corporation (BPC) has always made it clear that any price increase in SA affects the cost of imports, which along with the cost of local generation, transmission, distribution, and infrastructure must all ultimately be recovered from the end-user.

This means the power utility is likely to lobby government for a further increase in tariffs to recoup costs.

Government in collaboration with BPC sets the tariffs in Botswana.

Efforts to get a comment from the Ministry of Minerals, Energy and Water Resources  or BPC proved fruitless by the time of going to press.

However, following Eskom's tariff increase early this year, the BPC, in consultation with government, also raised local tariffs by nine percent for domestic and 14 percent for commercial consumers in April. Although government cushioned consumers then by approving a lesser tariff hike, it remains to be seen what the government's decision will be this time around.

At the same time consumers are already reeling from the food and fuel induced high inflation, which has eroded workers' disposable income. Electricity consumers will from this year until the year 2011 face supply shortages and tariff increases as Eskom begins to hike power prices as well as reduce power exports due to its own massive domestic demand, which it is failing to meet.

The power requirement for Botswana in terms

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of maximum demand (at peak time of the day and during the peak season) is currently 500MW. The bulk (75 percent) of it is imported from the SAPP, the major portion being from Eskom while 25 percent (120MW) is sourced from the Morupule Power Station.

Due to its own domestic supply constraints, where massive load shedding has already been experienced, Eskom has since the beginning of the year started to cut down supply to BPC.

According to a new five-year supply contract, from January this year, Eskom will scale down supplies to Botswana annually further aggravating an already precarious situation.

BPC also said that from 2008-2011, during peak periods, they are going to introduce, among other measures, load shedding if they fail to secure additional imports from the SAPP to supplement the supply from their traditional majority supplier (Eskom of South Africa).

However, chances of acquiring additional supplies from other neighbouring states are slim because most countries are in the same predicament.

Some of the measures BPC has put in place to manage the peak power requirements include publicity campaigns, demand side management and demand market participation.

However, these measures will not be adequate to cover the 250MW supply gap expected in 2010, a development which last December prompted the corporation to call for an expression of interest from Independent Power Producers (IPP) for construction of a power plant.

The IPP call for an expression of interest is a contingency measure to cover the supply gap in the event the Morupule Power Station Expansion Project, which is planned for 2010, is delayed.



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