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BPC waits on 5% tariff review request

MBONGENI MGUNI
Climbing higher: The BPC has applied for higher tariffs
Consumers will soon find out whether the Botswana Power Corporation (BPC) will be granted the five percent tariff increase it has requested for the 2021-2022 financial year, BusinessWeek has established.

The BPC made the request to the Botswana Energy Regulatory Authority (BERA) last year, together with proposals for another four percent increase in 2022-2023 and yet another four percent in 2023-24. The corporation received a 22% increase in the 2020-2021 financial year which ends on March 31.

 “BERA made a recommendation on the 2021-2022 tariff review and this is still going through the approval process,” BERA tariff and pricing manager, Malebogo Bakwena told BusinessWeek on Wednesday.  “The process is that we make a recommendation to the Minister and this then goes to Cabinet.”

A decision on the five percent request is due in time for the start of the new financial year on April 1. According to documents accompanying the BPC’s request for tariff review, the corporation expects that the 22% increase and proposed five percent for the upcoming financial year will “contribute to the reduction of the under-recovery gap between the total cost of electricity supply and total sales revenue”.

The BPC has suffered running operational losses generally since 2009, as the costs of producing or buying power have far exceeded tariffs.  The failure to operationalise Morupule B on time has also added to the BPC’s financial troubles, making the corporation heavily dependent on expensive diesel generation as well as costly imports.  In its tariff proposal, the corporation also says

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it expects that its revenues fell by P323 million in the 2020-2021 financial year due to the impact of the coronavirus (COVID-19). The corporation says due to the lockdowns, several businesses were compelled to stop operations reducing their electricity demand and consequently, the BPC’s sales. Government, meanwhile, has committed to providing the BPC with subsidies amounting to P900 million between 2021-2022 and 2023-2024.

The tariff increases and subsidies have outraged consumers, who say while they suffer the burden of higher electricity, the BPC is failing to stem power outages and improve quality of service. Consumers have also said the increases are badly timed, as many households struggle with the impact of COVID-19 on their incomes.  The planned increase in VAT is expected to make electricity even more expensive for consumers, while adding to the overall cost of living. BPC chairperson, Professor Oboetswe Motsamai told BusinessWeek the corporation had a responsibility to provide Batswana with cost-reflective tariffs in order to ensure stability of supply.

“We calculate the cost of production of our power and propose to BERA what we feel is accurate,” he said.

“We do not usually get what we need.

“We have already asked for a tariff increase this year and we are waiting for BERA to approve. The increase we have asked for this year is not much.”



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