Botswana hikes power tariffs by 22% to help loss-making utility

The Botswana Power Corporation (BPC) will increase electricity tariffs by 22% from April 1, the regulator said on Wednesday, in a bid to boost revenues for the loss-making state utility.

The Botswana Energy Regulatory Authority (BERA) said the price increases would apply to all categories of users.

“The increase is to ensure tariffs are cost reflective, affordable and appropriately priced. The rate remains one of the lowest in the countries in the region without hydropower,” it said.

BPC has made operating losses for years due to high import costs, non-performing assets and operational inefficiencies, making it reliant on government subsidies to stay afloat.

But it has been slashing costs as part of a turnaround plan that has seen operational losses fall from 2 billion pula in 2015 (R2,94 billion) to 72 million pula (R106,18 million) in 2019.

Government subsidies have gradually reduced from a peak of 2.3 billion pula (R3,38 billion) in 2015 to 800 million pula (R1,17 billion) in 2019.

BERA said that, although increasing tariffs would put pressure on households and businesses already under strain from the coronavirus outbreak, the rise was necessary to enable BPC to cover its operational expenses.

Botswana's electricity demand now stands at 600 megawatts (MW), mostly met by local coal fired plants and imports from South Africa.

The diamond-producing nation is looking to diversify its supply by introducing solar power and electricity produced from Coal Bed Methane (CBM), a gas found in coal deposits.

Two companies have been selected for a 100 MW CBM tender and are awaiting a Power Purchase Agreement (PPA) offer from the government. BPC has issued tender for a 100 MW solar project.

“In the next two years the country will have at least 130 MW of renewable energy,” BERA Chief Exeucutive Rose Seretse said.