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Another slap in the face for consumers

by Sunday Express
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. . . As electricity charges go up by between 11.8 % and 12.4 % from May 1


Limpho Sello

Electricity charges will go up by between 11.8 percent and 12.4 percent from May 1, dealing yet another body blow to already stressed consumers.

SX 01The Lesotho Electricity and Water Authority (LEWA) chairperson, Francina Moloi, on Friday told a press conference held in Maseru that the new charges were the result of “extensive consultations” involving, among others, officials from the Consumer Protection Association, Lesotho Chamber of Commerce and Industry, Transformation Resource Centre, Forum of Electrical Practitioners Industry, Catholic Commission for Justice and Peace, Nein Hsing and Maluti Mountain Brewery, as well as ordinary members of society.

Moloi said the Lesotho Electricity Company (LEC) had requested a 26.8 percent tariff increase in order to generate the required revenue of M778.1 million, which LEWA had, however, turned down following the aforementioned consultations.
According to Moloi, tariffs for domestic consumers, small businesses and commercial customers would be increased by 12.1 percent, 12.2 percent and 12.4 percent, respectively.

Last year, the increases were 6.9 percent for domestic and general purpose, and 6.9 percent for large customers and 7.4 percent for street-lighting after the LEC had requested an average hike of 25 percent, with a revenue target of M550 million.
Moloi on Friday explained: “On January 23 2014, the Lesotho Electricity and Water Authority received a Tariff Review Application from the Lesotho Electricity Company requesting an annual tariff increase of 26.8 percent on both energy and maximum demand charges in order for the company to generate the required revenue of M778.1million. The application did not request any changes in charges such as connection, wiring testing, wiring re-testing, survey, re-survey, meter-testing, licencing for wiring and house-extension.

“In line with the Tariff Filing and Review Procedure, the Authority identified data-gaps and communicated them in writing to the LEC on February 14 and the company provided clarifications.
“After duly considering the application, the written public submissions and oral presentations, reasons, facts and evidence provided, the LEWA board approved the LEC revenue requirement of M6.761 million for 2014/15.
“The approved revenue requirement, including levies, result in the end-user tariff increase of 12.1 percent for domestic customers; 11.9 percent for street-lighting; 12.2 percent for general purpose (small business); 11.8 percent and 11.9 percent for energy charges for High Voltage and Low Voltage industrial/customers respectively; and 12.4 percent for Maximum Demand charges for both High and Low voltage industrial/commercial customers.
“This effectively means, for example, that with M20, a domestic customer currently gets 18 units. With the approved tariffs, she/he will get 16 units for the same amount.”

Moloi justified the tariff-increases by saying the money generated would allow the LEC to cover the bulk-purchases from Eskom, EDM and ‘Muela hydropower plant; allow the company to carryout capital maintenance of its assets; incentivise the LEC to explore suitable alternative funding mechanisms for its infrastructure development; encourage the company to increase staff productivity through improved staff/customer ratio from 1:300 towards 1:400 and control labour costs in line with inflation and an increase in customer numbers; provide improved operational
efficiency by controlling operating expenses.

According to Moloi, the company’s operating expenses must be controlled in line with sales growth, increase in customers and the annual inflation.

On his part, the LEC Managing Director Mbele Hoohlo said since the tariffs had not been increased as the company had requested, “we are going to have to deal with the most important issues and then abandon others as we move forward”.

However, according to ordinary Basotho who spoke to the Sunday Express, the electricity charges would make life even more difficult as the prices of basic commodities such as meat and maize-meal continue to increase “almost on a daily basis”.
The residents also said government should consider subsidising such costs as electricity and fuel in order to cushion its citizens from the high cost of living.

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