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LEC 16.9% tariff increase under scrutiny

1 LEC gets input from different stakeholdersMaseru- Lesotho Electricity Company (LEC) say their proposal of a 16.9 percent increase on the cost of electricity will assist them in maintaining reliability of supply and align them along with their mandate of generation, transmission and distribution of electricity throughout the country .

Currently on their 10th tariff application since the bill started in 2006, the LEC, through their representative Mothae Nonyana who was presenting at the LEC public hearing of the proposed tariffs on Friday,  stated that the company requires a total revenue of M964 million to continue supplying with power effectively. LEC gets its electricity bulk supply from ‘Muela Hydropower Station as well as imports from South Africa’s Eskom and

Electricidade de Mozambique (EdM).

Nonyana said LEC’s highest expenses were incurred from their stock, transport costs of third party contracts, service fees and bulk purchases. He also explained that their work is often challenged by extreme weather conditions associated with the effects of climate change, old and outdated equipment as well as vandalism. He however, revealed that some vandalism criminals were apprehended and are currently serving a 15-year jail term with one in jail for three years for disrupting the Tikoe line, which shows great strides in stopping vandalism.

Although LEC cited bulk purchases as one of the main expenses especially from the EdM as it is bought in US dollars, Nkareng Letsie from the Consumer Protection Association (CPA) indicated that the EdM increase is tied to the currency fluctuation and the trend point to the strengthening rand against the US dollar that is currently prevailing.

“EdM account for the 36 percent of the imported electricity which means that the dollar/rand exchange rate cannot be blamed while most of the imported power is from Eskom, (representing) 64 percent of the 34 percent that is imported. The exchange rate has been on the steady decrease over 2016/17, which suggests power from EdM cannot be that expensive,” he noted.

Letsie, however, applauded LEC for their work as the public has not been victimised to the consequences of load shedding in recent years. In the same token, he showed that the 16.9 percent tariff increase proposed by LEC cannot be justified beyond a doubt and that poor people cannot afford the increase given the poor economic performance and current growth that does not translate into welfare improvement of the lower class of society. Furthermore, Letsie put that industries will be facing unbearable increases in input costs, which may perpetuate the bad spell that prevails in the economy.

According to CPA, LEC is not acting in good faith for good industrial growth and poverty alleviation, more so as Lesotho is unable to meet the provisions made in the National Strategic Development Plan to generate 10, 000 decent jobs per annum.

“The reality is, Lesotho might lose even the current employment opportunities owing to spiraling cost due to LEC. We cannot afford to lose the few jobs that we have as the dependency burden is increasing day in day out,” he stated.

The proposed tariff adjustment comes at a time when the government, through the Ministry of Energy and Meteorology, is working tirelessly to light up the nation and ensure that every household has electricity. It is against this background that CPA feels that schools will have to increase the fees to accommodate LEC’s 16.9 % increase or risk terminating some important programs.

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