Mohloai Mpesi
THE parliamentary Natural Resources Cluster Committee chairperson, Moeketsi Motṧoane, has called on the government to generate sufficient electricity to meet national demand instead of relying on expensive power imports.
Mr Motṧoane made these remarks during his committee’s session in the National Assembly on Tuesday. The session was convened to hear a petition from two activists, Kananelo Boloetse and Mokotjo Maseli, urging the government to cancel Value Added Tax (VAT) and levies on electricity.
The petitioners argued that electricity was a basic human need, and the inclusion of VAT and levies on its purchase made it unaffordable and inaccessible to many Basotho, particularly the poor. However, the petitioners later dropped their bid to remove the levies, acknowledging that the Lesotho Electricity and Water Authority (LEWA) depended on levy revenues to expand electricity access. Removing the levy, they said, would financially cripple LEWA and render it susceptible to political interference.
Instead, they maintained their call for the annulment of VAT on electricity, stating that the current 10 percent VAT disproportionately burdens the poor by inflating electricity prices.
Tuesday’s session was also attended by the ruling Revolution For Prosperity (RFP) Members of Parliament from Makhaleng, Rothe and Thaba-Phatṧoa, being; Mootsi Lehata, Lebohang Phohleli, and Thabo Maretlane respectively. Democratic Congress (DC) MPs Thabiso Lekitla (Mekaling) and Mohau Hlalele (Thaba-Phechela) were also present.
The Ministry of Finance and Development Planning delegation included Deputy Principal Secretary Rethabile Maluke, Economic Policy Director Libako Leisanyane, Revenue Services Lesotho Deputy Commissioner Setsoto Ranthocha, Tax Policy Director Nthabiseng Sello, Senior Tax Policy Officer Manthakoana Masoetsa, Tax Policy Manager Moeketsi Ntoi, and LEWA Chief Executive Motlatsi Ramafole.
Mr Motṧoane criticised the government for subjecting poor Basotho to high electricity prices, which he said resulted from buying power from external suppliers such as EDM in Mozambique and Eskom in South Africa. This, he said, forces the Lesotho Electricity Company (LEC) to hike prices, placing a heavy burden on consumers.
“Why is electricity expensive for consumers? It is because we import electricity from other countries, who charge us as they please. We then have to raise prices to cover levies,” Mr Motṧoane said.
He pointed out that electricity generated at the ‘Muela Hydropower Station had a low production cost of 12 Lisente per unit. Even if the tariff was increased to 52 Lisente, as previously proposed, electricity would still be more affordable than current prices of imported power.
“Even if we engage private companies to generate electricity locally, they are in business and will not guarantee lower prices,” he added.
He urged the government to invest in its own electricity generation infrastructure to reduce reliance on imports.
“The government must create its own electricity pool and generate power locally. That is the direction the country should take,” he said.
Mr Ramafole warned that inviting private companies to generate electricity would not necessarily lower prices.
“As a regulator, when evaluating tariff increases, I consider whether consumers can afford them, while also ensuring the supplier remains financially viable,” Mr Ramafole said.
He also said most Independent Power Producers (IPPs) charged cost-reflective tariffs, which were often higher than current rates.
“Some IPPs operate off-grid and charge M5 per unit. So, local generation alone will not automatically reduce prices. ‘Muela does not produce enough electricity, and imports from EDM and Eskom triple the costs, driving prices higher.”
On their decision to drop the levy petition, Mr Boloetse said removing the levy would leave LEWA vulnerable to political interference.
“We believe electricity is a basic necessity and every Mosotho should have access to it. If the levy contributes to access, we will not pursue its removal,” Mr Boloetse said.
He added that customer levies help LEWA operate independently.
“If LEWA is defunded, it will collapse, and there’ll be no regulator for LEC or WASCO.”
In addition, Mr Maseli said it would be counterproductive to remove a levy that supports rural electrification and promotes the very access they seek.
“We realised that scrapping the levy would undermine rural electrification, which advances access. LEWA convinced us that customer levies ensure its independence, which shields it from influence,” Mr Maseli said.
They nonetheless maintained the scrapping of VAT on electricity.
However, Economic Policy Director, Libako Leisanyane, argued that Lesotho was bound by the Finance and Investment Protocol (FIP) ratified by all Southern African Customs Union (SACU) member states, which required standardisation of VAT rates.
She said most SACU countries charge 15 percent VAT on electricity, while Lesotho charges 10 percent.
“FIP mandates harmonised VAT rates and discourages multiple VAT structures. After Lesotho ratified the protocol, we raised VAT on communications to 15 percent and on electricity from 5 to 10 percent,” Ms Leisanyane said.
She argued that electricity was a basic service, not a basic need, as defined by international standards.
“Basic needs include food, water, shelter, and clothing. Electricity does not fall under that category. A basic need is something you cannot survive without, and you can survive without electricity.”
Mr Lekitla sharply rebuked Ms Leisanyane, accusing her of misleading the committee by selectively quoting the Finance and Investment Protocol.
He cited Articles 8 and 14 of the protocol, which state that member states must align fiscal policy with pro-poor, inclusive development principles and remove barriers to accessing basic services like electricity.
“It is unacceptable for a ministry official to redefine basic needs contrary to our Constitution. The Constitution promises access to basic services and equity,” Mr Lekitla said.
He further accused Ms Leisanyane of hiding behind the protocol to justify VAT charges, while conveniently ignoring provisions that support access.
“She reads the parts that suit government’s stance but ignores those promoting access. Botswana, a signatory to the same protocol, has zero-rated VAT on electricity for low-income households.”
