As of December 01, Basotho will see the implementation of the new tariff of 7.85 percent by the Lesotho Electricity Company (LEC) for the year 2022 /23 as opposed to the initially proposed tariff increment of 12.32 percent.
This was revealed by Lesotho Electricity and Water Authority (LEWA) Chair Pricing and Tariffs Committee, Mr. Khotso Masheane on Wednesday where he said the increment is for both Energy and Maximum Demand (MD) charges for all customer categories.
He said the company had applied for the revenue requirement of M1.478 billion but instead it will be allowed revenue of M1.28 billion and a resultant tariff increase of 7.85 percent for both Energy and Maximum Demand charges across all customer categories will not only be adequate to cover the company’s prudently incurred costs but will also ensure affordability of electricity by the consumers.
He said charges for connection, wiring testing, re-testing, survey, re-survey, licensing for wiring, meter testing and house extension for the financial year 2022 / 23 will remain similar to those that applied in the last financial year.
He noted that the authority assessed the company’s application for compliance with regulatory instruments and it was found to be materially non-compliant.
He said as a standard practice, the authority also held public consultations to solicit comments and inputs from stakeholders, saying the general opinion emanating from public consultations was that the company’s tariff increase should be within the range of zero percent (0%) to eight percent (8%).
He added that in the application, they considered several factors including; low economic performance and high inflation resulting from lingering negative effects of the COVID-19 pandemic and the ongoing Russia and Ukraine war and the need to strike a balance between the sustainability of the company and affordability of electricity by the customers.
Furthermore, he said they observed that the company’s proposed revenue requirement of M1.478 billion would result in a 41.2986 percent increase in tariffs whereas the 12.32 percent tariff increase would, on the other hand, result in a revenue requirement of 1.175 billion, saying it was therefore observed that there was no link between the revenue requirement of M1.478 billion and the proposed 12.32 percent tariff increase.
He added that the company’s approved budget for the financial year 2022 / 23 is M1.108 billion which translates into a 5.9933 percent increase in tariffs.
On the other hand, LEC General Manager Strategy and Planning Project, Ms. Lineo Mokhesi thanked LEWA saying however that they are yet to learn the document to review their needs so that they are able to offer quality services to the customers.
She said the increment comes very late in the financial year and that also delays in maintenance saying this happens at a stage where the equipment is badly damaged.
Moreover, LEC Corporate Manager, Mr. Nosi Makhotla said the affordability of analysis is done by the company covering all aspects of the economy, saying they use machines, vehicles and other equipment every day which need maintenance hence more money to maintain them.
He added that they are also faced with the challenge of vandalism which he said results in equipment needing maintenance, therefore, urging communities to protect the equipment saying it is not only for LEC but them as well.
He noted that they also purchase equipment outside the country where prices vary a lot.
Meanwhile, in 2021/2022, LEC increased tariffs by 10 percent.
