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Electricity to cost more 

by Lesotho Times
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 -as power tariffs are hiked by nearly 10 percent 

Mathatisi Sebusi 

ELECTRICITY tariffs have been hiked by nearly 10 percent, adding more woes to already suffering consumers. 

The latest hike is effective from 1 April 2024. 

The Lesotho Electricity and Water Authority (LEWA) said yesterday it had approved a 9.6286 percent hike in both the “energy and maximum demand” tariff and 5.0 percent for the “lifeline tariff”. 

The energy and maximum demand tariff is charged for consumers who gobble more power, especially in the commercial sector, and the “lifeline” tariff is mainly for domestic users.   

The Lesotho Electricity Company (LEC) had applied for a 23 percent adjustment for the “maximum demand” category and 15 percent for the “lifeline’ category for the financial years 2023/24, 2024/25 and 2025/26 to meet its financial targets.    

“The Financial Year 2023/24 is almost over and the approved tariffs for the preceding financial year continue to be applicable, but they result in under-recovery….,” LEWA said referring to the last adjustment of 7.85 percent. 

The new higher increase will thus apply for the financial years 2024/2025 and 2025/2026. 

One of the factors for not securing the 23 percent it had demanded was because the LEC was found to be non-complaint with regulatory requirements set out by LEWA such as filing monthly and quarterly reports timeously. 

Speaking at a media briefing in Maseru yesterday, LEWA board member, Tṧolo Letete, said the decision was reached after the Authority received a Multi-Year Tariff Application for the period 2023/24-2025/26 from LEC on 28 September 2023. 

He said in its application, LEC had set its Revenue Requirement (RR) – the money that must be collected annually to run its operations –  at M2.09 billion, M2.10 billion and M2.13 billion for the financial years 2023/24, 2024/25 and 2025/26, respectively. 

“In order to achieve this Revenue Requirement, LEC proposed upward adjustments of 23 percent, 15 percent and 15percent on both Energy and Maximum Demand (MD) charges across all customer categories for the Financial Years 2023/24, 2024/25 and 2025/26,” Mr Letete said. 

He said besides the request for upward adjustment in electricity tariffs, the LEC also requested an approval to charge “cost-reflective/actual costs” for effecting standard connections within 50 metres of the “existing company’s network infrastructure and for customers to pay 40 percent of the connection costs upfront with the remainder being paid within a period of three months”. 

Mr Letete said the basis for the request was that the standard connection fee of M2000, set in the Electricity Connection Policy, was no longer sufficient to cover the current costs of such connections. 

He said however, after thorough consideration of the requests, LEWA decided that while energy tariffs can be adjusted, the request to increase standard connection fees should be deferred until such time that the government has reviewed its policy. 

The LEC has also been allowed the Revenue Requirement of M1.32 billion, M1.52 billion and M1.64 billion for the Financial Years 2023/24 2024/25 and 2025/26 respectively, against requested Revenue Requirement (RR) of M2.09 billion, M2.10 billion and M2.13 billion for the Financial Years 2023/24, 2024/25 and 2025/26. 

Mr Letete said before reaching those decisions, the Authority assessed the LEC’s application for compliance with Regulatory Instruments and it was found to be materially non-compliant. 

“As a standard practice, the Authority conducted public consultations to solicit comments and inputs from the public and stakeholders. The general opinion emanating from public consultations was that the company’s tariff increase should be within the range; 0 percent to 16 percent,” Mr Letete noted. 

He said in its assessment of the Modified Tariff Review Application, the Authority considered several factors including low economic performance and high inflation resulting from, among other things, the on-going Russia-Ukraine war, and the need to strike a balance between sustainability of the LEC and affordability of electricity services by the customers. 

He said they also put into consideration stakeholder inputs and comments on the company’s application. 

He said LEWA, through its assessment of the LEC’s application, observed that among others, the quality of LEC’s data keeps deteriorating and the company did not seem to put enough effort to improve it. The LEC did not submit monthly reporting forms in line with set timelines and it failed to submit quarterly and annual reports requested by the Authority, he said. 

Mr Letete further noted that LEWA observed that LEC had, received an Adverse Audit Opinion in its Financial Statements in the Financial Year 2021/22. 

“The Authority also observed that the company keeps requesting increases in tariffs in order to improve revenue while there are other options to improve its revenue and cash flows, yet its services have been deteriorating over the years,” he said. 

In its defence, LEC said it did not have enough finances to ensure electricity supply for Basotho as its funds had been depleted. 

LEC finance manager, Sello Mothae, said last year the government had paid all the money it owed the parastatal, hence the LEC was able to import electricity for the whole year. 

Mr Mothae said now that all the money had been spent, and the government did not owe them anymore, they had no other option but to request for higher tariff adjustments. 

The latest increase is however likely to burden consumers suffering in a  low wage and huge unemployment environment.   

 

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