The African Development Bank (AfDB) has given Botswana Regulatory Authority (BERA) three years to start reporting directly to Parliament, The Business Weekly & Review has established.
This is after AfDB concluded that Botswana’s electricity sector is among Africa’s worst regulated and worst performers across a number of key metrics.
The unflattering state of affairs is revealed in the annual African Development Bank’s 2021 Electricity Regulatory Index that covered 43 countries on the continent and assessed their impact on the performance of their electricity sectors.
Botswana was ranked 33 out of the 43 countries that participated in the report. For the fourth consecutive year, Uganda’s sector was the best performer. Other strong performers include Kenya, Tanzania, Namibia and Egypt.
Among the 2021 report key highlights are that regulatory independence is one sub-indicator where Botswana and other worst performers have room to improve; in 93 percent of the sampled countries, governments and stakeholders exercise influence over regulatory authorities.
AfDB therefore recommended that BERA should in the next three to five years report directly to Parliament. The level of annual regulatory fees and levies charged by BERA should be approved by Parliament and BERA’s decisions and reasons should be accessible to the public, AfDB recommended.
BERA was also called on to carry out regular cost of service studies, develop a distribution grid code for its distribution network, carry out an assessment on the quality-of-service performance of Botswana Power Corporation (BPC), develop specific model contracts for different renewable energy technology and develop a quality of service code.
The continental Bank also called on Botswana to ensure that appointment of commissioners who were previously staff of a regulated bank is prohibited. Botswana was also urged to publish a law on development of mini-grid and off-grid systems.
The report says regulators are duty-bound to report regularly on their activities to stakeholders and that mechanisms should be in place to help ensure that regulators behave in accordance with the legal mandate for which they were established.
“These mechanisms should also be able to hold regulators accountable if they deviate from their mandate,” it emphasizes. “Investors are often more confident if there is an independent appeal mechanism for resolving disputes between the regulator and operators.”
The report says a regulator requires a sustainable and independent source of funding to run the institution and implement its activities and initiatives.
Significantly, the report asserts that funding from the government compromises the independence of the regulator while dependence on penalty fees is unsustainable and could compromise the objectivity of the regulator. In some cases, it notes, even the salary levels of regulatory staff are set by the government.
The report says from a financial standpoint, this limits the action of the regulator and its independence. It emphasizes total independence the regulator reassures the operators and investors in the electricity sector of the regulator’s objectivity and ensures an arm’s length relationship with utilities, reducing the stakeholders’ ability to influence the decisions of the regulator.