BERA calls public hearing for BPC tariffs

The Botswana Energy Regulatory Authority (BERA) will this Thursday hold a public hearing into the Botswana Power Corporation’s (BPC) request for two tariff increases of five percent each over the next two years. The hearing will be held at Travel Lodge in Gaborone between 9am and 1pm. Under its Act, BERA calls the hearings to receive public input before decisions on the tariffs are made.

According to BERA, the BPC says while its own calculations indicate that the required tariff should be 23% higher to cover its operations and obligations under its Act, the actual tariff request was being kept lower.

“BPC submitted that it undertook an assessment of its required revenue for the 2024 financial year in line with BERA prescribed methodology which translated into P6.5 billion, requiring a 23% tariff increase,” a notice from BERA reads.

“However, the corporation’s tariff application is an increase of five percent across all customer categories to attain the total operating income of P5.37 billion inclusive of a P300 million consumer tariff subsidy from the government.”

In its request to BERA, the BPC argued that in terms of costs per kilowatt hour, tariffs are presently 30 thebe below the break-even point, despite tariff increases of 22% and three percent in the last two financial years.

The BPC has not been awarded a tariff increase for the 2022– 2023 financial year and had initially sought a four percent increase for 2023–2024. The non-cost reflective tariffs had led to a poor financial position, with the BPC recording total losses of P486.9 million in the year to March 2022.

In addition, the corporation noted that government’s subsidy is expected to decline to P300 million in the 2023–2024 financial year, down from P400 million in the current financial year and P500 million in the 2021– 2022 period.

On social media, members of the public have already reacted with outrage at the BPC’s request for a tariff increase, noting that these would add to the troubles already facing consumers due to rising inflation, currently trending at a 14-year high.

In addition, consumers have said the quality of service from the BPC is not commensurate with the tariff hikes it is seeking, as the availability of electricity is plagued by frequent faults. The BPC has also come under fire for its internal efficiency, particularly around its ability to recover debts from major consumers such as government departments.

The BPC recently announced that it is generating excess power at Morupule B and would sell its off-peak generation to South Africa.

Consumers have questioned why more tariff hikes are required when the BPC is importing less and when it is set to earn more through its exports to South Africa.

The corporation noted that government’s subsidy is expected to decline to P300 million in the 2023–2024 financial year, down from P400 million in the current financial year and P500 million in the 2021–2022 period