THE Lesotho Electricity and Water Authority (LEWA) is in the process of amending the LEWA Act so that the management of the Lesotho Electricity Company (LEC) and Water and Sewage Company (WASCO) can be held personally liable for various acts of malfeasance to protect the public.
For instance, there was a recent outcry over “contaminated” water supplied by the Metolong Authority which caused communities around Maseru to suffer illnesses such as diarrhoea and stomach aches.
The WASCO executive management should have been held personally liable for that mishap and then forced to pay fines from their own pockets. This according to LEWA Chief Executive Officer, Motlatsi Ramafole, who has vowed to hold managers at the two critical state utilities accountable once the proper governing laws have been put in place.
Mr Ramafole told Lesotho Times (LT) reporter, Mohloai Mpesi, and News Editor, Mohalenyane Phakela, that LEWA was unrelenting in its endeavours to review the LEWA Act to ensure more effective quality controls over LEC and WASCO’s operations.
LT: Which law establishes LEWA and what is the Authority’s mandate?
Ramafole: LEWA was established in 2002 by the Lesotho Electricity Authority (LEA) Act as the electricity regulating body, but was amended in 2006 to accommodate the aspect of water and sewage services, hence the name change from LEA to LEWA.
Our main mandate is to issue licenses and monitor WASCO and LEC’s operations to ensure the quality of services they offer and to set their performance standards. For instance, if you were to apply for a connection, be it for electricity, water or sewage, there are certain guidelines that we have given them which they must follow in terms of the time frames of responding.
The other important aspect of our mandate is to ensure safety and acceptable supply standards. It goes together with ensuring security of supply of services. We should ensure that at all material times, they supply electricity and water of high quality.
LT: In what circumstances can LEC and WASCO licenses be revoked and/or are there penalties if they are not revocable?
Ramafole: The licenses can be revoked, there are license conditions which clearly state what they can and cannot do.
There are also penalties wherein if they have omitted to perform a certain act, then they can be subjected to a specific penalty. But we only have two state -owned companies, one for electricity and another for water. What would happen if we were to revoke either WASCO or LEC’s licence? Who will cover the void? It is a very delicate situation.
Suppose we find LEC guilty of having infringed one of the conditions and we fine them M5 million. They will pay that M5 million, but at the end of the day, it is going to be paid by the consumers because they will find a way to recover that money from the end user by charging more for their service.
Fortunately, we have avoided imposing fines. However, we have learned from our sister regulators in the region that the management of entities of this nature can be held liable. We are in the process of enacting a law which will allow us to hold the executive management of either WASCO or LEC personally liable for the fines we may impose on them. The managers will pay the fines from own pockets. This will help ensure they offer quality services and that end users do not bear the costs of such discrepancies.
LT: Recently, there was an outcry from communities around Maseru which complained the water supplied by WASCO from Metolong, was making them sick. What role does LEWA play in such situations?
Ramafole: We have quality of services and supply standards. The utilities are supposed to offer quality services. If it’s water, it must be water of the highest quality, and if it’s electricity it has to be uninterrupted supply.
WASCO has 16 centres which we inspect from time to time to ascertain the quality of their water. If we find that there are certain transgressions, we write a report and also order WASCO to address such. Unfortunately, during our inspection, this one was not detected.
One of the things that are supposed to happen in instances of this nature is that the utility itself has to inform us immediately and give us the measures they are taking or have taken to address that situation.
Wasco told us informally about the issue. We had to write a letter to them seeking clarity regarding steps they had taken to address the situation. We are still awaiting their formal report which will advise on the action LEWA is to take.
Not long ago, LEC’s poles were vandalised in Peka and that cut supply in most regions of the Leribe district. LEC informed us immediately.
We do not expect to get information from the public, media or social media. We expect the utility itself to inform us so that we may be engaged where there is need.
LT: Last year, LEC closed WASCO’s channels over its M40 million debt to the power utility. What role does LEWA play in those situations because at the end of the day, that affects the end users more than WASCO itself?
Ramafole: Since they both provide essential services, what ought to have happened is that before the supply could be cut, the dispute should have been brought to the attention of the regulator for intervention, because it affects the economy of the country as a whole. This does not mean we condone WASCO’s behaviour of not paying their electricity bills, but whatever action is taken should not derail the end users. LEC can cut power to WASCO offices, that is fine, but not the turbines which supply water to the communities.
Immediately when that happened, we intervened and engaged both parties and at the end of the day a payment plan was agreed between Wasco and LEC.
In our pacts with them, there are codes of practice. Those codes clearly spell out that if WASCO is owed or LEC is owed, even if they were to cut supplies, they (codes of practice) clearly mention the institutions that they are not supposed to touch. For example, if a hospital owes WASCO, water supply cannot be cut over that debt because that would jeopardise patients’ health. They have to work on a payment plan. Same applies for LEC.
LT: What do you make of the PAC findings that money amounting to M34 million from LEC customers, was pocketed by LEC employees who produced fake receipts? …That also goes with Wasco because there were revelations in the same platform that its employees had swindled money amounting to M37 million?
Ramafole: We did learn about the PAC issues but our understanding is that the law ought to have taken its course as that was criminality. We cannot order any prosecutions because we don’t have powers to do that.
LT: There have been suggestions that the hefty tariff increases asked for by both companies are primarily aimed at recouping embezzled funds. What’s your take on that?
Ramafole: My answer is no. That is not how we consider the tariff hike applications.
One of the conditions is that they should give us their most recent audited financial statements every time they seek to hike tariffs.
Both companies have made several demands to increase tariffs, which LEWA approved. The tariff hike for WASCO was 5 percent for volumetric tariff charges from the 14 percent they had demanded, as well as 7.9 percent for LEC which had also demanded 14 percent.
There are certain things that we consider when we deal with tariff applications such as operations, labour and depreciation costs.
Inflation is one of the factors and the proportionality of the inflation against the requested increase and other factors such as balancing affordability/sustainability as well as public opinion.
We gather the public’s views to aggregate them against the LEC and WASCO demands to balance sustainability of the utility against affordability by the end user. We also look at the efficiencies or inefficiencies of the utility. The most important one is to look at prudently incurred costs and the reasonableness of the requested revenue requirement.
All these have got nothing to do with trying to recoup what has been lost by the utilities through embezzlements.
There are uncontrollable costs. For example, LEC buys electricity from Mozambique and South Africa (EDM and Eskom) which increase electricity whenever they want. That also forces LEC to increase tariffs when faced with such.
LT: LEC has made an application for upward adjustments in electricity tariffs: 23 percent, 15 percent and 25 percent on both Energy and Maximum Demand (MD) charges across all customer categories for the financial years 2023/24, 2024/25 and 2025/26. Have you (LEWA) received the most recent audited financial statements from LEC? If so, do the operational realities as reflected in the financials justify such hefty hikes?
Ramafole: When we receive an application, before we can go into its merits or demerits, we have tariff filing and review procedures.
Each application has to be compliant with the tariff filing procedures. If it is not, we write a letter listing the missing requirements of the application. We would then shelve the application until such time when those would have been addressed. You would recall that LEC made its application in January 2022 but was only approved in November when they had submitted the audited financial statements.
Speaking about the current application, they have submitted all the required documents and their plea is being dealt with by LEWA.
LT: What role does LEWA play into levelling the playing field in the green energy sector?
Ramafole: The main driver of the global economy is energy. Europe now has a carbon tax. It is highly likely that Lesotho will soon be charged such if we keep buying from Eskom which uses coal to generate electricity.
We are all encouraged to go green. I am not saying it is going to be cheaper because investors also want to make profits, but it will make life easy. The issue of climate change in terms of pollution will be a thing of the past.
There is what we call firm energy, which is needed in abundance. Wind is a bit more reliable than solar but even wind is not firm. The only firm thing we can talk about is hydro because we have water in abundance which is a much more reliable power generation tool. If we can invest in those, I guarantee you that our economy will be better off.
The electricity that LEC buys from ‘Muela Hydropower station is very cheap, something like M12 per Kilowatt. Electricity that LEC buys from EDM is USD15 (M285) per kilowatt. When if full swing, ‘Muela gives us 72 Megawatts from the 200MW needed by the entire country. The Ramarothole Solar Power Station produces an addition 30MW. LEC therefore has to outsource the remainder from EDM and Eskom which it pays around M60 to M70 million monthly. Those are issues we need to address so that the money can circulate in the country.
We need to encourage investors to come in numbers for the country to end up having to export to Southern African power pool.
But to do that, we need to do a willing agreement framework which will allow LEC to buy from those investors at reasonable prices.
LEWA is also intending to reduce the license fees which are usually around M7000, depending on how much power one intends to produce. We feel that to attract more, we need to lower it to encourage people to come and make the electricity supply abundant for us to be able to export.
