The Botswana Regulatory Authority (BERA) has submitted an application for a multi-million Pula loan to the African Development Bank (AfDB) targeting investment by the private sector in renewable energy, signalling an ambitious effort by the regulator to wean itself off government subventions.
This is contained in the recently released BERA 2020/21 annual report according to which the Authority is not financially independent as it is hugely dependent on government subventions.
โHowever, given the legal provisions on Sections 26 and 51 of the BERA Act, and the need for BERA to be on a sustainable revenue stream, we have developed the Authorityโs Fee Structure Proposal,โ the report says. โThis proposal considers four options of funding BERA operations and is expected to be finalised and submitted to MMGE (the parent ministry) and Cabinet for approval.
In addition to this, โBERA is also exploring funding options in the form of grants from other financiers such as (the) African Development Bank (AfDB) to fund its strategic projects. We are currently processing a grant application estimated at USD1.7 million (about P19.8 million) for the Renewable Energy IPP (Independent Power producer) procurement programme.โ
Said the Authorityโs Board Chairperson, Fanile Mathangwane, commenting on this: โI am pleased to inform you that we are committed to ramping up our facilitation activities with the view to accelerate the development of renewable energy projects in Botswana with private sector participation.โ
Mathangwaneโs sentiments were echoed by the CEO of BERA, Rose Seretse, when she noted: โIn our endeavour to contribute to the acceleration of the development of renewable energy projects in Botswana with private sector participation, we are currently sourcing funding from (the) African Development Bank (AfDB) for these projects through our parent ministry. We are at an advanced stage of the grant application from AfDB for the renewable energy Independent Power Producers procurement programme.โ
On competitiveness of the energy sector and BERAโs expected performance ย to ensure 65 percent performance level for operators within the electricity and petroleum subsectors, the report says the performance level was only measured for the electricity subsector and the average Botswana Power Corporation (BPC) performance achieved was at 52 percent as at March 2021. โThe performance level for the petroleum subsector will be gauged in the next financial year,โ the report says.
The report adds that during this financial year, Botswana Power Corporation submitted a tariff application requesting a 5 percent upward tariff adjustment for the year 2021/22.
โAlthough the Authority was in agreement with the magnitude of the adjustment, it took a decision to ramp the tariff increases on a less rapid rate of 3 percent. This was done in recognition of the need to cushion consumers against a higher tariff adjustment on the back of a previous 22 percent increase for the year 2019/20,โ the report says.
It notes that the level of imported power is high and contributes significantly to costs of the power utility. โIt is therefore critical for internal generation capacity to be increased via timely remediation of Morupule B and implementation of the Integrated Resource Plan (IRP),โ it says.
The report adds that although preparatory work on the Cost of Service/Supply of Electricity was completed in the 2019/20 financial year, the study has not been done due to budgetary constraints. This study will assist it in determining, among others, costs associated with production, transmission and distribution on supply of electricity. Sourcing of funding for this project is ongoing and is expected to be secured in the 2021/22 financial year.
During the financial year, BERA worked under the leadership of the parent ministry to develop the Integrated Resource Plan for Electricity (IRP) 2020-2040. It is expected that in the coming financial year, the government will approve this plan. This will open more opportunities for power generation activity to cater for the identified needed capacity for both local consumption and export.
Regarding consumer protection and dispute resolution, the Authority says it received two complaints from customers who allege that they lost their houses due to fires caused by electricity supplied by Botswana Power Corporation. These complaints, by the end of the financial year, were still under investigation.
The report says the country still falls short of implementing market-based pricing owing to lengthy process of approvals. โAs at end of March 2021, the variation of local prices compared to international prices stood at an average of 13 percent. Both the industry and dealer margins were not reviewed during the year,โ it says.
However, BERA says it commenced preparations in March 2021 for engagement of external expertise to review the local cost components of the pricing structure, including development of an industry margin model and slates for alternative routes.ย โSuch work is planned to be concluded in the 2021/23 financial year. Work to review the retail margin will also be undertaken in the coming financial year,โ the report says.
