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Balance cost-reflective tariffs with national interest – Seretse

STAFF WRITER
Balancing act: Seretse
The chief executive officer (CEO) of the Botswana Energy Regulatory Authority (BERA) Rose Seretse says there is need to balance the Botswana Power Corporation’s (BPC) request for cost reflective electricity tariffs with the national interest.

In a recent interview, Seretse explained that apart from determining tariffs charged by service providers like BPC, BERA also has an ethical responsibility to protect and promote the interests of customers, consumers and other users by ensuring that tariffs are cost reflective, affordable and appropriately priced.

“We must never lose sight of the need to protect the environment and the national interest. However, it must be noted that Botswana’s tariffs remain competitive for countries in the region without hydroelectric power,” Seretse said.

BERA is yet to announce its decision on a recent application by BPC for a five percent upwards tariff adjustment for 2021-2022 and another four percent for 2022-2023.  However, it emerged at a recent virtual meeting of the Regional Energy Regulators Association (RERA) of Southern Africa, that electricity tariffs in Botswana were amongst the lowest in the region.

Botswana reportedly charges US cents 9.436/kWh; compared to Namibia (15.998 cents), Swaziland (13.720 cents) and Mauritius (16.810 cents). However, Botswana’s charges are higher than Lesotho (7.391 cents), Zambia (7.400 cents) and Zimbabwe (9.345 cents).

Lesotho’s charges are lower because it has a fully amortised hydroelectric plant and a relatively smaller population. The RERA presentation also identified Eswatini, Mauritius and Namibia as the only countries in the region that have cost-reflective tariffs. Botswana

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was also faulted for failing to conduct a Cost of Service Study (COSS), which would ensure that BPC tariffs were tied to the costs of providing electricity. SADC countries have long committed to transitioning towards cost-reflective tariffs as a way of resolving recurring problems of load-shedding and obsolete infrastructure. Such a move would also improve profitability and encourage Independent Power Producers (IPP) to invest more in the energy sector.

“This is in line with our mandate of enabling the private sector to build assets so they can deliver reliable, affordable and good quality services. Government has kick-started initiatives to encourage citizen participation in the energy sector. That way, Botswana can become energy secure and a net exporter of electricity by 2036,” Seretse said.

In motivating for cost-reflective tariffs during a BERA public hearing recently, BPC acting CEO, Edward Rugoyi said the corporation needed a healthy liquidity position to undertake overdue refurbishment of its transmission and distribution infrastructure.

Further, he said, government’s consumer tariff subsidy has been steadily decreasing from P2.3 billion in 2015 to P500 million in 2020, which resulted in under recovery of allowable costs. BERA is responsible for providing an efficient regulatory framework for the energy sector by ensuring that their prices are cost reflective and affordable.



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