- Households and businesses brace for higher costs as power prices rise amid elevated living expenses
GAZETTE REPORTER
Botswana households and businesses are set to face higher electricity costs after the Botswana Energy Regulatory Authority (BERA) approved a nine percent tariff increase for the 2026/27 financial year, adding pressure to consumers already dealing with rising living costs.
The new tariffs will come into effect on August 1, 2026, following an application submitted by the Botswana Power Corporation (BPC) on December 3. The utility had initially applied for an average tariff increase of 46 percent across consumer categories.
While the approved adjustment is significantly lower than BPC’s request, households are expected to feel the impact as electricity joins a growing list of essential expenses competing for limited income.
For many families, monthly budgets are already under pressure from rising costs of food, transport, housing, education and debt repayments. The increase in electricity charges could force households to adjust spending elsewhere or find ways to manage their energy consumption.
Growing Capacity
The tariff increase comes against the backdrop of improvements in Botswana’s electricity generation capacity.
According to the Electricity Generation and Distribution Statistics Brief for the First Quarter of 2026, local electricity generation increased by 20 percent quarter-on-quarter, rising from 751,514 MWh during the fourth quarter of 2025 to 901,903 MWh in the first quarter of 2026.
The increase was largely driven by higher output from Morupule A and Morupule B power stations, alongside growing contributions from solar power plants.
The report notes that the record-breaking generation figures demonstrate that solar infrastructure is operating at scale, providing a more stable alternative to diesel-powered generation.
During the first quarter of 2026, Morupule A and B accounted for 90.8 percent of total electricity generation, producing 818,873.9 MWh, while solar plants contributed 9.1 percent, equivalent to 82,519.96 MWh.
Solar facilities in Bobonong, Phakalane, Shakawe and Mmadinare contributed to the growing diversification of Botswana’s electricity sources.
However, economists caution that higher electricity production does not automatically translate into lower tariffs, as the cost of producing, maintaining and distributing power remains a key factor.
Production Costs
Gomolemo Basele, a quantitative analyst with a banking background, said the cost of production remains one of the main factors influencing electricity tariffs.
“I think generally, the cost of production is a key factor,” Basele said. “Fuel prices being one, as well as possibly even the cost of just maintaining some of this infrastructure.”
He said ageing infrastructure, particularly at Morupule B, could contribute to higher operating costs as power stations require more maintenance.
“I think Morupule B for example, we’ve heard of, just cost that just an unending game. So, I think the closer that these power plants get to retirement, the costlier it is to keep them running.”
Basele said government’s current fiscal pressures have also created challenges in maintaining the previous level of support for the utility, increasing the need for tariffs to move closer towards reflecting the cost of electricity production and distribution.
“Given sort of the pressure that government is currently facing, they’re not able to support them to the same degree that they have been,” he said.
He said BPC had for a long time not necessarily made tariff adjustments that reflected increases in power production and distribution costs, contributing to the sharp 46 percent tariff application.
“For a long time, BPC has not necessarily been making adjustments that reflect any escalation in power production, for example, or power distribution, which is why the last proposal, 46 percent was so steep,” he said.
“It was almost playing catch up.”
Basele said the approved nine percent increase could represent a phased approach towards aligning tariffs with the actual costs associated with producing and distributing electricity.
“I think from that proposal, there’s more of a phased approach possibly being taken because that was a very steep proposal,” he said.
Inflation Effects
Basele said the tariff increase would have an inflationary impact, affecting both households and businesses.
“The impact is obviously inflationary. So it increases the cost of quite a few things,” he said.
He explained that electricity is a key input for many businesses, meaning higher tariffs could increase production costs and eventually affect prices of goods and services.
“If you consider water and electricity are key inputs for most businesses, increasing the electricity tariffs increases their input costs, which will most likely also feed through in terms of whatever goods and services that they’re producing.”
He said the increase comes at a time when consumers are already experiencing pressure from higher living costs.
“So if they’re producing for households or for other businesses or for government, for example, the final cost of these products is going to increase on the back of this tariff increase as well,” Basele said.
He added that the adjustment adds further pressure to an already challenging environment, although recent fuel price reductions may have provided some relief.
“It’s adding to already elevated pressure that households are experiencing,” he said.