Norconsult Africa (Pty) Ltd Managing Director, Tore Horvei has said lack of Independent Power Producers (IPPs) in Botswana is the main reason for limited investment in the power sector. He said this in his presentation at the two-day Botswana Resource Sector Conference held at the Gaborone International Convention Center last week.
Horvei said Southern Africa’s economy and development are constrained by energy challenges such as supply shortfalls, which are due to underdeveloped energy infrastructure in the region. He said access to electricity remains low and unequal, supply is unreliable and power costs are high and raising.
Though IPPs are gaining ground in other countries in the region like South Africa, Mozambique and Zambia, they are still lacking in Botswana. Botswana Chamber of Mines Chief Executive Officer Charles Siwawa says IPPs can alleviate power challenges that the country is experiencing.
Siwawa told Gazette Business that there are no IPPs in Botswana because companies are still doing feasibility studies on producing power in the country. “The legislation is there that allows independent producers other than the Botswana Power Corporation. The process to produce a study takes quite a long time and have to ensure that what is required for the production can be achieved sustainably,” he said.
Like any other initiative, IPPs have their own challenges. Senior Research Fellow at the Botswana Institute for Development Policy Analysis (BIDPA), Professor Roman Grynberg said; “My understanding is that IPPs have been an issue because private sector prices for generating power would be higher than BPC prices so government has taken the decision that IPPs can only have a limited role,” noting that it was for the same reason that Eskom does not allow IPPs in its core business in South Africa.
“They want IPPs in renewable energy but not in thermal power generation,” he said of Eskom. “If we want to have IPPs in the renewable sector in Botswana, then we also need to do what they are doing in RSA (South Africa), which is to provide them with a special feed in tariff because renewable energy generation is more expensive than coal fuelled thermal stations,” he said.
The BIDPA research guru said having IPPs in the thermal sector would lead to higher prices for electricity because “IPPs must run at a commercial profit.” He said assuming that BPC generates power as efficiently as an IPP, then IPPs will cost the consumer more, but if the private sector does it more efficiently than BPC; this will not be the case.