THE business community has bemoaned the recent electricity tariff increases, saying they would have no choice but to pass on the cost to consumers.
This was after the Lesotho Electricity and Water Authority (LEWA) last Friday allowed the Lesotho Electricity Company (LEC) to hike electricity charges by between 12.2 and 12.6 percent effective on 1 May 2016. LEWA regulates electricity, urban water and sewerage services.
In its response, the Lesotho Chamber of Commerce and Industry (LCCI) said the increases would adversely affect businesses which were already reeling from other operational challenges.
“Given the prevailing economic situation in the country whereby consumers lack the disposable income needed to sustain the operations of businesses, a 12 percent increase is huge and will have negative ramifications,” LCCI President Ntaote Seboka said this week.
“However, in order to absorb the tariff increases, businesses will be forced to pass on the cost to consumers by increasing their own prices. Yet we know that consumers are already struggling due to the high levels of unemployment.”
He said the government needed to review the viability of the new electricity connections to ensure the resource is fully utilised.
“We need to depoliticise new electricity connections since it burdens consumers who have to finance the installation of power infrastructure for people who don’t have the capacity to utilise the resource,” said Mr Seboka.
“New connections should be carried out in a strategic way so they can positively impact on the economic activities in the country.”
The Private Sector Foundation (PSFL) echoed the sentiments, saying the increase was higher than they had anticipated and spelt gloom for consumers.
PSFL Chief Executive, Thabo Qhesi, said: “We appreciate the fact that there are increasing costs of power generation, but we did not expect that the price of electricity would go up by this high margin.
“This increase is bad news for consumers, because businesses will simply increase their prices to recoup the costs incurred on electricity.”
He said the time had come for the government to start subsidising electricity like it does with other basic commodities such as petroleum products.
“The government should consider playing a similar role on electricity as it is becoming too expensive, especially for vulnerable groups such as the elderly and unemployed,” added Mr Qhesi.
For its part, the Migrant Workers Association (MWA) – a civic organisation representing the interests of current and former mineworkers as well as other groups that migrated to look for work such as factory workers and construction workers – said the increase was too exorbitant for its members who earn low wages.
“This increase has the potential of inhibiting many people from using electricity as it will be cheaper to use alternative means of power,” MWA Executive Director Lerato Nkhetše said in an interview this week.
“The ongoing power connections around the country may prove to be futile as the intended beneficiaries may not be able to afford the electricity.”
He also urged the government to focus on increasing power generation.
“The government needs to conduct a study to determine if electricity is actually being utilised in the areas they made new connections. I suspect they will get a negative report,” said Mr Nkhetše.
“It is our wish that the money being used for rural electrification should be redirected towards power generation for a while so that we can control the costs of electricity since more new connections entail more electricity being imported.”