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Steep power tariff hike hurts economy

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IN this issue we carry a story of a proposal by the Lesotho Electricity Company (LEC) to increase power tariffs by a whopping 25 percent.

The LEC is also proposing a 20.4 percent increase on commercial power tariffs, a move that will surely hit our frail industry. 

If the proposal is approved in the current form consumers will pay 19 lisente more per kilowatt-hour for domestic usage.

Consumers in the “general purpose” category will pay 22 lisente more per kWh (kilowatt-hour), according to the proposal which is already being considered by the Lesotho Electricity Authority (LEA), the body that regulates the local electricity industry. 

The LEC says the proposed increases are meant to help the power company remain viable.

It argues that the cost of electricity has to increase because South Africa and Mozambique, our power suppliers, have periodically reviewed their power charges.

This is a fair and reasonable justification. 

It’s in the interests of the power users that the LEC remains viable and continues to run efficiently.

Yet we must highlight the importance of balancing the needs of the power company and those of consumers. 

Our biggest worry is with the domestic users (households) whom we know are already struggling to make ends meet.

The past three years have not been good for most people.

The country had barely recovered from the 2007 drought that triggered a spike in food prices when fuel prices skyrocketed in 2008, adding to the consumers’ troubles. 

And before the country could even recover from the shock of the fuel prices and the further food price hikes that came with it the global economic recession hit us in 2009. 

Because of the economic recession thousands have lost their jobs and the few that are still employed have had to contend with largely stagnant or even reduced incomes as companies take austerity measures to survive.

Add this to the fact that we are still grappling with joblessness and the Aids pandemic which has spewed 200 000 orphans.

A massive increase in power tariffs like the one the LEC is proposing surely spells disaster for many people.

A 25 percent increase in power charges could sink more households and worsen the plight of those that are already battling to put food on the table.

We are also worried about the impact the proposed increases will have on our fragile industry.

The textile industry, the country’s biggest private sector employer, is yet to recover from the recession which saw a slump in orders from key markets like the United States.

Their margins are still tight and volumes are yet to recover to the pre-recession levels.

This is why we encourage the LEA to be cautious when it decides on how much the LEC should charge consumers.

The LEC would have to make some concessions for the sake of our people and the economy. It would be counter-productive for the LEC to insist on an increase that could sink the very companies that it seeks to serve.

The LEC cannot afford to price its product beyond the reach of the majority customers.

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