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Botswana: BPC Tariff Hike Spells Tough Times Ahead for Consumers
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The Voice (Francistown)
29 April 2008
Posted to the web 29 April 2008
Chedza Simon
Francistown
The Botswana Power Corporation (BPC) has announced an increase in electricity tariffs with effect from the 1st of January.
BPC increased tariffs for domestic use by 9% from 6% in March 2004 while the tariffs for commercial purposes were hiked by 15%. Fixed charge for domestic usage was also increased from P 8.58 to P10 while fixed charge for commercial purposes was hiked from P22.69 in September 2005 to P26.09.
Some electricity consumers have responded with shock and despair to the tariff increase but BPC Head of Public Relations Tlhomamiso Selato has said that the increase was necessitated by difficulty in sourcing surplus power in the region.
She told Your Money: "There is a continuing reduction in the availability of surplus generating capacity in the region which is characterized by an increase in the cost of imports, consistent with the normal laws of supply and demand. There is also a difficulty in sourcing electricity from the Southern African Power pool."
Selato explained that Botswana imports more than 72% of its power requirements from the region, the bulk of which comes from South Africa.
"Payments for these imports are made in foreign currency and therefore the devaluation of the Pula against the Rand adversely affected the cost of imports. After the devaluation the Pula continued to depreciate against the Rand," she said.
She explained that there was also a sharp increase in the operating costs of the Corporation, which were mainly caused by steep increase in the cost of base metal process, water and fuel.
Yet another factor, which necessitated the increase, was the adoption of the Revised Financial Reporting Standards, which resulted in a sharp increase in depreciation, alongside the upward revaluation of fixed assets. She said while BPC has joint ventures with outside Corporations to generate electricity for the region, the increase in tariffs depends on circumstances prevailing on the environment. "We increase tariffs once a year depending on circumstances. In the history of tariffs, we have tried to limit increases to below average inflation. In some years (1995) we dropped the tariffs by 10% due to prevailing circumstances then," she said.
Meanwhile Domestic electricity consumer Leinanyane Tsiane of Gaborone has reacted with shock and despair towards the tariff hike.
"We were shocked to hear of news that tariffs have been increased. The increase took us by surprise. The cost of living has become too high for an average Motswana,"
Tsiane suggested that it would have been ideal for BPC to consider the introduction of the sale of pre-paid electricity units through a card system in urban areas like the corporation does in rural areas for domestic use so that consumers do not find themselves with the burden of not being able to pay their electricity bills at the end of the month.
"That way, we would not feel the burden because consumers would buy electricity commensurate with what they can afford. Life is going to be so difficult," she lamented
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A Manager at Protea Survey Instruments Company said, "It goes without saying that the 15% increase is going to negatively impact not only on our operations but many others as well."
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