Morupule B delays drag budget into deficit

Brian Benza | Friday October 25, 2013 16:13

 

This is as a result of an unbudgeted P1.2 billion government outlay to the Botswana Power Corporation (BPC) for emergency power procurement, following the delay in generation of electricity from Morupule B Power Station.

 The P11 billion Morupule B Power Station was initially supposed to start generating power at the beginning of 2012 but was delayed for about a year forcing BPC to seek emergency power from Eskom as well as from the country’s two diesel-fuelled two power peaking plants.

 In an interview with the Business Week, Secretary for Economic and Financial Policy in the Ministry of Finance and Development Planning Taufila Nyamadzabo said, barring a surprise rise in revenue for the remainder of the financial year, the 2013/14 budget will now post a deficit instead of the initially envisaged surplus.

“Although the approved budget for the year forecast a surplus, additional expenditure which arose from BPC cash injections for emergency power procurements and the need to finance drought will drag the budget into a deficit. We had to spend an estimated P1.2 billion for extra BPC finances while drought relief measures cost over P300 million,” he said, on the sidelines of a Budget Pitso held in Gaborone this week.

The plant’s four units were supposed to be generating 600MW by October last year but only three units are on stream with the remaining 150MW unit expected to kick in by end of December this year.

After a three-year spell of deficits due to the 2008 global economic recession, Botswana’s budget bounced back to a surplus last year and government planned on maintaining the pattern in the medium term.

Although BPC has perennially been running operating losses, this year’s situation was exacerbated by the power plant delay.

In the wake of the delays, government had to negotiate a new 300 megawatt power deal with Eskom, of which only 100 MW was firm and the availability of the balance dependent on South Africa’s own requirements.

 To beef up the electricity output, BPC also had to source extra supply from the two power peaking plants which were reportedly run for longer periods daily during the peak of the crisis.

This year alone, government planned to spend P300 million on securing power from the two plants, while the BPC’s costs of importing power were estimated at nearly P2 billion in 2012.

Industry experts estimate that diesel powered turbines such as at the 90MW Orapa power station can consume upto 140,000 litres of fuel in a day. Diesel retail prices are currently hovering around P9 per litre.

 For the next financial year (2014/15), Nyamadzabo said government is targeting a budget surplus of around P2.08 billion.

“With only two years remaining before concluding of NDP 10 implementation, the core policy option going forward is to optimise public resources allocation by ensuring that funds are only provided for implementing national priorities.

“Against this background, the remaining non-core activities should be outsourced to the private sector. Government effort should therefore be directed towards addressing shortcomings currently inhibiting growth of private sector investment and local industry development,” he added.