Electricity tariff hike could switch off houses

MASERU – A planned electricity tariff increase will trigger price hikes across the board.
This will pile more pressure on already hard-pressed households and on companies that could respond by retrenching workers to contain costs, according to consumer rights defenders and business leaders.
The Lesotho Electricity Company (LEC) said two weeks ago that it wants to increase charges by 14.2 percent for the year 2019/20.
The tariff change will see domestic consumers paying M1.5992 for a standard tariff of electricity up from M1.4009.

Factories and other industrial consumers will pay M0.0274 more than the M0.1936 standard tariff they pay now.
But Khoabane Khalemela, a representative of the Consumer Protection Association (CPA), said the tariff hike could put electricity beyond the reach of many families that are already struggling to cope with the high cost of living.
Khalemela questioned how, for example, civil servants were expected to afford the tariff increase in addition to the cost of other basic commodities that have also gone up when the government has failed to increase their salaries.

Khalemela’s claim that increasing tariffs could make electricity unaffordable to many families is backed by research which shows that similar hikes in the past have seen consumers, especially in rural areas, switching to other cheaper sources of energy.
He also expressed worry that the move could lead to job losses.
“Employees might lose their jobs due to the high price of electricity,’’ he said, adding that the most that consumers could possibly afford was a 0.2 percent increase in tariffs.

Khalemela said by opting for such a steep increase in electricity charges, the LEC was endangering jobs and in so doing was acting contrary to the objectives of the government’s National Strategic Development Plan that seeks creation of 10 000 new posts by next year.
The assistant secretary of the Lesotho Textile Export Association (LTEA), ’Malikhabiso Majara, said companies would struggle to absorb the new tariff increase.

Majara said many firms were already struggling to keep costs down after increasing the salaries of their workers last year following industrial action by workers towards the end of 2018.
The situation has been made worse by the weakening rand which automatically pushes up the cost of importing raw materials, machinery and spares because the Basotho loti is pegged to the South African currency, Majara said.
She added that increasing the cost of electricity would simply worsen what she described as a crisis facing many businesses.
“Since the firms are the biggest electricity consumers, this is going to (worsen) the prevailing crisis,’’ she said.

According to Majara, industry’s position was that there be a freeze on electricity tariff hikes until the operating environment for business improves and the economy is growing at more than two percent per annum.
The LEC buys electricity from Muela, EDM, ESKOM and SAPP Electricity Market.
According to the LEC representative at the stakeholders’ meeting earlier last month, Mothae Nonyane, the LEC does not receive subsidies from the government.

Nonyane said even without government support in the form of subsidies the LEC has been able to electrify 243 046 households or about 40 percent of total households in the country.
It has also been able to upgrade its systems, but he said the company still faces some critical challenges requiring it to mobilise resources and cash that can only be made possible by raising tariffs.
Some of the challenges the LEC faces include vandalism and theft of copper cabling, with the company, for example, using M637 000 in the 2017 to 2018 financial year to replace stolen cables.

Harsh weather conditions were also another concern as the company spends more money to ensure its workers are able to maintain its property and equipment in sometimes very difficult weather, said Nonyane, who made the comments as he announced the planned tariff hike on March 14.
But while it is understandable that the LEC charges market-related tariffs to remain viable and keep supplies running, this could be self-defeating where it concerns its bid to make electricity available to more households.

A study by Moeketsi Mpholo, who heads the Energy Research Centre at the National University of Lesotho (NUL), showed that families in rural areas tend to limit their use of electricity in tandem with tariff hikes.
The study was carried out in March 2017 in the three villages of Ha-Lejone in Leribe, Seboche in Butha-Buthe and Ha-Sekake in Qacha’s Nek found out that most consumers there relied on gas and firewood for cooking and mostly used electricity for lighting.
The study further revealed that 54 percent of the villagers using electricity said that should tariffs keep on rising they were going to cut down consumption to save money, while 27 percent said they were going to quit electricity altogether and opt for alternative sources of energy.
The authors stated that tariffs had since 2007 gone up by an average 23.6 percent which had also seen average usage of electricity by households declining by the year.

Refiloe Mpobole