MASERU – The Lesotho Electricity Company (LEC) Board of Directors blamed political “interference” as one of the key sources of the utility’s problem.
This information surfaced during the parliament’s Public Accounts Committee (PAC) on Monday this week.
Registered under Companies Act of 1967 (as amended), and established in 2006 per the LEC (Pty) Ltd Establishing and Vesting Act 2006, LEC is a 100 percent government owned company.
LEC purchases power from the ‘Muela Hydropower Station which produces 72 megawatts of electricity, and sells it to the public. It supplements with the additional power from South Africa’s Eskom and Electricidade de Moçambique (EDM) in Mozambique.
With the now running phase one of the Marothole Solar Power Station which generates 30 megawatts of electricity, it has probably brought some relief to the country’s energy situation.
Chairperson of the LEC Board of Directors Advocate Rapapa Sepiriti told the PAC that upon the arrival of the board he leads in 2020 they conducted a diagnosis to identify key challenges grappling the company. Amongst those, he said political interference was found to be the key.
The LEC Board of Directors members consist of Advocate Sepiriti (Chairperson), Mohlomi Seitlheko (Interim Managing Director), Advocate Khotso Nthontho (Company Secretary), Mophethe Monyake, ‘Masophia Lesaoana, Prof Molibeli Taele, Pesha Shale, Seretse Mohlouoa, Teboho Shelile, Jerry Seitlheko, Mapota Mosia, Mokhoenene Lehohla and ‘Mathapelo Ramakatane.
He told the Committee that the Minister of Natural Resources, whom he did not mention, but supposition could be ventured that it was Hon Mohlomi Moleko, wrote a letter to the board directing them to halt key operations for a six month period. This the Chairperson said happens after the new government came into power.
Asked whether such correspondence was within the perimeters of the law, Advocate Sepiriti gave a negative response.
Advocate Sepiriti also raised what they uncovered to be “unethical” conduct that had bedeviled the company. This he pointed out was manifest as some board members would fight over tenders despite already existing procurement regulations in place.
He went on to say they directed the management to undertake the audit from 2010 onwards, in order to have a clearer picture of the financial situation of LEC and the audit which will further inform their next move in salvaging the company.
Lack of compliance and proper personnel at LEC were also among key issues that had negatively affected the company’s performance, the Committee was told.
The Chairperson testified before the PAC that upon entering the office, they had to ensure the company’s security of supply so that it is able to offer services in a sustained manner. They also had to ensure there is realignment at the company for stability and progress, wherein they engaged the PricewaterhouseCoopers (PWC) Company to support them on understanding the structural realignment.
PAC member Hon Montoeli Masoetsa took a swipe at the LEC Board Members accusing them of abdicating their responsibilities and fiduciary duties.
“You are not there to just get the allowances. Your fiduciary duty is to ensure the success of that company,” he charged.
Similarly Hon ‘Makatleho Motsoasele expressed “disappointment” in the board. “Now you people are fighting for the tenders. There is a procurement policy in place. We cannot sit here discussing the tenders. No, that is wrong,” she charged at them.
The Chairperson distanced the board from having a hand in tenders saying it was their predecessors.
Meanwhile, PAC Chairperson Hon ‘Machabana Lemphane Letsie accused LEC of continuously requesting for tariffs to increase yet year in, year out, the Auditor-General issues adverse opinions over their financial matters.
She mentioned the M34 million that was allegedly swindled by some workers of LEC in connivance with some private companies. Addressing this, the Chairperson said some companies are already beginning to pay back those monies while some are abroad. This is where these companies would pay at the private accounts acting in cahoots with some LEC staff thereby causing the company to suffer losses.
Advocate Sepiriti went further to tell the Committee that the management told them when these shenanigans were taking place, they were not in office.
The PAC frowned on the SAP system at LEC, an automated system that would synchronize the company’s system to work interface; that company that is offering such service, Focus One, has been recommended by its parent company, EOH. The Committee further complained that the consultants working on this project seem to lack competency.
In its response the LEC Board said they endorse the system and there are processes underway to engage the owners of such systems who are based in Germany.
One of the Directors, Lesaoana said in 2017, the decision was made to have the system that would integrate all LEC systems and such work was done in 2018. At the time, M30 million, she said had been used to procure this integration service, but in 2021, it had to be restarted as all the work had been attacked by the virus.
She said such a contract for this service was signed by the previous board.
She said when the work began to reintroduce this system afresh, the COVID-19 pandemic broke out and it was implemented in 2021.
Taking stock of this SAP system, the LEC Board of Directors Chairperson said it has given them a headache as it is not clear when this contract will end.
During the 2022/2023 financial year, LEC is said to have spent in the region M800 million on bulk power purchase from Mozambique and Eskom, the figure he said does not reflect the tariffs imposed for the current financial year.
Advocate Sepiriti said the utility needs money. LEC function is to transmit, supply electricity and have a little generation facility at Semonkong where we use diesel to generate power.
He called for the review of the electricity installation costs. When existing ones were adopted by the Cabinet, he said for a 50 meters radius, an applicant pays M2 000.00 but now that figure has since doubled to over M5 000.00.
He further blamed the defaulters for the company’s financial situation.
Last year, LEC disconnected the defaulting clients including government institutions such as the High Court. It had also disconnected the Water and Sewage Company (WASCO) for electricity debts over M40 million.
The government last reportedly remitted M45 million in 2014 to the utility for maintenance of the network. Last week during the tabling of the Mid-Term Budget Review in parliament, the Minister of Finance and Development Planning said that the government had remitted M51 million to LEC for among others procurement of additional power and for refurbishment of ‘Muela Hydropower Station.
PAC had also established there is only one person trading at LEC for procurement of power and when such a person trades, they have to trade outside the country raising questions such as the frequency through which the trading is done and the costs of such traveling. On requesting the statement of such an account, the Committee was only furnished with the balance which is M26 million.
The Committee had since instructed the board to come in the next appearance with more information to shed light into this account and an arrangement that there should be only one person who trades.