Following the Lesotho Electricity company (LEC) tariff review requesting a revenue requirement of M1.241billion and resultant tariff increase of 30.9 %, Lesotho Electricity and Water Authority (LEWA) issued the decision made on the matter on Tuesday this week.
According to the chairman of LEWA Relebohile Mosito, the board decided to allow LEC a revenue of M1.07 while LEC requested M1.241. The electricity tariff will therefore, also be increased by 10.3727 % for both energy and maximum demand for the categories of customers, which will see a single unit cost about M1.62.
He however mentioned that connections, wiring testing, wiring retesting, survey, resurvey, licensing for wiring meter testing and house extension are expected to remain the same. The changes come into effect today (Friday October 01, 2021).
Mosito further stressed that the decision was reached in line with the evidence presented to the authority by both the company and the public. The authority based its decision on the economic and environmental climate especially in the time of the Covid-19 pandemic.
“The justification advanced by the LEC for the M1.241 billion revenue requirement was not adequate. Among other things, the authority took into consideration that the allowed RR will be sufficient for LEC to operate effectively,” he said.
He further mentioned that the revenue requirement (RR) shall among others pay imported electricity, replace its ageing infrastructure and carry out repair and maintenance vital for the reliability of electricity supply.
LEWA stated that the decision not to give LEC what it required is a result of several meetings that led to the conclusion that would not be harmful to electricity consumers.
The economy’s strength, the impact of Covid-19 on the consumers and the affordability of electricity by various customer categories in the country were considered in other to bring this conclusion to pass.
Meanwhile, LEC Managing Director Mohato Seleke, expressed the company’s gratitude on the decision pointing out that the decision will be helpful to the company and its effectiveness.
However, economist Majakathata Mokoena indicated electricity is a necessity which people cannot live without, hence they were forced to shift some of their money to electricity in order to continue using it.
“People will still smoke or drink alcohol even if it raised to 100% so this too seems to be a necessity therefore I doubt they will stop using electricity, rather they will have to shift their money to electricity, meaning this will affect the consumer spending,” he said.
He added that the consumer spending is likely to decline and therefore affect the value added tax VAT too. Mokoena noted that even though it is early to comment on electricity tariffs the country can expect low consumer spending leading to affected VAT.
One electricity consumer a Lefu Matli, said the government has to find ways to simplify the lives especially for those things which are a necessity. He therefore added that they have to continue using electricity since they rely on it for almost every device they use daily.