‘LEWA made right call on tariff hikes’

Rethabile Pitso

THE Consumer Protection Association (CPA) has lauded the Lesotho Water and Electricity Authority’s (LEWA) for taking consultative approach and considering the impact their recently introduced tariff hikes would have on the economy.

LEWA approved new water and electricity tariffs, which came into effect on 1 April 2015. The new tariff regime means that domestic consumers who use between 1 000 and 5 000 litres of water now pay M4.51 from the previous M4.18. Electricity users now fork out M20 for 15.55 units from the previous 16.42 units for the same amount.

However, according to CPA Secretariat Nkareng Letsie, LEWA deserves credit for having considered the interests of all stakeholders before effecting the tariff hike.

LEWA Chief Executive Officer Ntoi Rapapa told the Lesotho Times’ sister paper, Sunday Express, that the authority held four public hearings throughout the country as well as various announcements in the media with the purpose of taking on board all the consequences the hikes would have on Basotho.

“LEWA created a platform on which the interests of key players, such as consumers and suppliers, were considered,” said Mr Letsie.

“It was an acceptable increase bearing in mind that the manufacturing sector needs such essential services to remain affordable to ensure business viability.”

He added that all the countries under the Common Monetary Area (CMA), which consists of Lesotho, Namibia, Swaziland and South Africa, have resolved to ensure inflation within the countries does not exceed six percent.

CMA links South Africa, Lesotho and Swaziland into a monetary union under the influence of the SA Reserve Bank. It is also allied to the Southern African Customs Union (SACU) which seeks to maintain the free interchange of goods between member countries.

Mr Letsie said CPA supported LEWA’s decision not to impose hefty tariffs as consumers were already reeling from the high prices of other goods and services. He said the authority also took into consideration the effect a sharp tariff spike would have on Lesotho’s textile industry, which is the country’s biggest employer.

“Textile factories rely on water and electricity as their basic inputs and a high increment on the price of the commodities would drastically curtail their ability to produce at the same levels,” he said.

“The factories’ competitive advantage would have been further reduced on the global stage where they compete with other countries.

“If they were forced to hike their prices in response to the increased production costs, their products may not be viable, leading to eventual closure.”

Mr Letsie said Lesotho’s edge over other countries, in terms of low production costs, should not be allowed to be eroded.

“If the textile firms seize to be competitive due to the price increases, it would further lead to the laying off of many textile factory workers who, because of losing their jobs, would in turn not afford to pay for electricity and water,” he said.

“Moreover, textile firms are reliant on the African Growth and Opportunity Act which, if not renewed on time, will impact negatively on the economy through job losses.”