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Funding challenges threaten electricity generation at ‘Muela

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Pascalinah Kabi

ELECTRICITY generation at the ‘Muela Hydropower Station is under threat and could soon grind to a halt if the government does not move fast to avail funds for the power station, the Sunday Express has learnt.

This publication has also learnt that workers at the Lesotho Highlands Development Authority (LHDA), which runs the power generation plant in terms of the bi-national Lesotho Highlands Water Project (LHWP) treaty with South Africa, are yet to be paid their September 2020 salaries due to the funding challenges.

Water Ministry principal secretary (PS), Malefetsane Nchaka, admitted there were funding challenges. Mr Nchaka said although was currently operating smoothly, “it will be very hard to continue generating electricity” if the funding challenges were not addressed soon.

He however, downplayed the salaries issue, saying the delay in paying workers was due to “a small technical problem within our ministry which particularly affected the transfer of funds from the ministry to the LHDA”.

The ‘Muela Hydropower Station generates about 84 megawatts (MW) out of the 156 MW Lesotho consumes on a daily basis. The remainder is from imports from South Africa and Mozambique. The ‘Muela station was built in terms of the 1986 LHWP treaty which established projects to provide hydroelectricity to Lesotho and water to South Africa.

In terms of the financing arrangements, Lesotho is responsible for funding the operational costs of the ‘Muela station while South Africa is responsible for funding the transfer of water to its Gauteng province.

But according to authoritative government sources, Lesotho is struggling to raise funds for the hydropower station.

“‘Muela is on the brink of collapse,” a source told this publication this week.

“The station managers are unable to plan for the current financial year because they don’t know if they will receive the government funds to finance their operations or not. They need to buy equipment and other necessities to enable them to generate electricity for the country.

Another source said operations at the station were “hanging by a thread” and the station would soon be unable to meet its financial obligations if the government did not urgently inject funds into the LHDA which oversees the running of the station. The LHDA gets its funds from the Water Affairs Ministry. The ministry was allocated M375, 7 million by the government for the 2020/21 financial year.

“The situation is bad. Government really needs to move fast and secure funding for the station before it collapses. We will have serious electricity issues if funding allocated to the station for the current financial year is not released,” the source said.

A staffer at the LHWC who spoke on condition of anonymity confirmed that they had not received their September salaries due to the funding challenges.

“As of today, we still have not received our salaries despite promises that we would have received them by Thursday. Our salaries are usually paid on the 23rd of each month and we are now being told that the salaries have not been paid due to some technical problems at the Ministry of Finance. We have also heard other information suggesting that the real reason for the delay is that government still hasn’t released funds for the LHDA,” the staffer said.

PS Nchaka confirmed that the staffers had not received their salaries.

“They have not been paid because of a small technical problem. Their salaries were delayed because of challenges experienced with the new system government is now using. With our ministry, the system particularly affected the transfer of funds from the ministry to the LHWP.

“There was a challenge when we were given a warrant which includes workers’ salaries for this month. We encountered a technical problem with that system. Immediately after realising that the problem was not getting resolved, we agreed that they should allocate a new warrant to enable us to pay staff,” Mr Nchaka said adding he expected the salaries to have been paid by Friday. However, workers said they still not been paid yesterday.

Mr Nchaka however, admitted that power generation at ‘Muela could soon be affected if funding challenges were not addressed soon.

He said he had already alerted the Ministry of Finance of the “wider havoc that could occur if the government does not act urgently”.

“Currently all government ministries including the Ministry of Water have not received their operational budgets allocated to them.

“The revenue collections have not been as much as we had assumed and there is a shortage of the cash to finance the budget. So, the LHDA has not received all the monies that were allocated to it.

“We are working tirelessly with the PS for finance (Nthoateng Lebona) to resolve this challenge to ensure that major operations which can paralyse service delivery are financed. My ministry is working closely with the Ministry of Finance to see how best to fund ‘Muela to avoid a situation where it is paralysed.

“‘Muela has not been affected as we speak but it will be affected if we don’t hit the ground running and ensure that we find cash for its operations. If we don’t address this problem, it will be very hard to continue generating electricity. In our discussions with ‘M’e Lebona, I made her aware of the wider havoc that can be caused by this situation if we don’t attend to it urgently,” Mr Nchaka said.

LHDA chief executive officer Tente Tente said ‘Muela was operating normally.

“In a hypothetical case where there is no funding, the consequences will be dire. These may include the shutting down of the station and Lesotho would have to import all its energy needs. However, considering the importance of the station to the country, this is highly unlikely,” he said.

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