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Massive electricity tariff hike looms

Tefo Tefo

MASERU — Consumers should brace themselves for a massive increase in power charges this year.

The Lesotho Electricity Company (LEC) has submitted a proposal to the Lesotho Electricity Authority (LEA), the body that regulates the local electricity industry, to review power tariffs by a whopping 25 percent.

Speaking at a consultative meeting organised by the LEA on Wednesday, the LEC chief executive officer Francis Hloaele said the electricity company wanted to increase the tariffs to cover operational costs which he said had increased.

He said South Africa and Mozambique, from whom Lesotho imports power, have constantly reviewed their power tariffs.

The LEC, Hloaele said, needed to review its tariffs to remain viable.

According to the proposal the LEC wants the price of a kWh (kilowatt-hour) to increase from the current M0.7192 to M0.9134 for domestic usage.

If the proposal is approved, consumers will pay 19 lisente more per kilowatt-hour for domestic usage, according to Hloaele.

A kilowatt-hour is reached when you use 1 000 watts for one hour.

Hloaele said the increase means customers will pay 22 lisente more per kWh for general purpose use.

The proposed increase spells more gloom for consumers who are
already grappling with galloping cost of living.

The situation is dire for urban dwellers who rely on electricity for their energy needs.

Many households in urban areas are already living on meager incomes that are not enough to buy the basics. 

Already smarting from the effect of the economic recession businesses have not been able to increase wages to match the inflation rate, leaving many workers poorer than they were last year.

The minimum wage in the textile industry, which employs nearly 35 000 and is the largest private sector employer, stands at M916 per month.

The lowest paid worker in the government, the country’s biggest employer, gets just over M1 300 per month.

With the employment rate at 45 percent and more companies cutting jobs due to the economic recession more families have sunk deeper into poverty, making it impossible to feed themselves without assistance.

News this week that taxi industry is planning to review fares only makes the situation worse.

Although people in the rural
areas will not be directly affected by the tariff reviews because they are less reliant on electricity, they too will
have to brace themselves for the increases that business will effect on their goods and services to cover the new charges.

Manufacturers and retailers normally pass on power costs to consumers.

There is a strong possibility that basic groceries and services might become more expensive as a result of the tariff increases.

The LEC has also proposed a 20.42 percent hike on commercial power tariffs.

This will see commercial users paying M32.34 more per kVA.

A kVA is equal to 1 000 volt amps.

Companies have warned that the increase could push their operating costs and render them unprofitable.

They have also warned of more job losses that might result from the looming tariff review. 

During the consultative meeting on Wednesday, Lesotho textile exporters told the LEA the proposed increases were not sustainable.

Lin Chin-yi, Lesotho Textile Exporters’ Association representative, warned that the proposed increases could lead to more job cuts in the textile industry which he said is yet to recover from the loss of key markets.

“We suggest that the increase should be in relation with the inflation rate which is estimated at around five percent,” Chin-yi said.

“We say this after considering that we lost three factories last year and in the process we lost about 2 400 workers,” he said.

“We already incur huge expenses to operate our textile industry especially because we are looking forward to maintaining Lesotho’s status in the United States’ market.”

“Lesotho still holds the first position as the biggest textile exporter in the United States. But we should maintain that status because we are competing for the market with other countries.”

Chin-yi added that the electricity tariff adjustment proposal is coming at a time when the textile industry is already battling to contain costs to remain viable.

A member of the Consumer Protection Association, Khoabane Khalema, said the adjustments should be balanced with the nature of services provided by the LEC.

Khalema said the LEC does not respond timeously to complaints raised by people who use electricity for domestic purposes.

“We suggest at least a 10 percent increase on tariffs especially for domestic use.

“This suggestion is made after considering that it is not easy for members of the public to raise sufficient funds to pay for electricity,” Khalema said.

But Hloaele said the proposed tariff adjustments were justified.

“LEC has to meet its obligations in order to survive.

“Tariffs are the only source of revenue for the LEC,” he said.

LEC needed more funds to transmit, distribute and supply electricity.

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