Proposed power tariff hike irks textile firm

Rose Moremoholo

MASERU

A textile company, NienHsing Group, says a 25.4 percent tariff hike proposed by the Lesotho Electricity Company (LEC) will knock off their market competitiveness as they would be forced to increase prices.

NienHsing Group is one of Lesotho’s biggest textile companies with subsidiaries such as C&Y Garments, NienHsing International, Fomosa and Global Garments.

A representative of the company, Bereng Molapo, told a stakeholders’ meeting last Friday that all companies under the NienHsing Group might opt to retrench workers to keep afloat if the LEC’s proposal is approved.

Molapo said they might be forced to do so because of the high electricity bill.

The LEC has submitted its proposal to the Lesotho Electricity and Water Authority (LEWA) for consideration.

Molapo said all the company’s subsidiaries combined electricity bill stood at a staggering M47 million for 2015.

He said Formosa paid a whopping M37 million of the total cost because it is more capital intensive than other firms which are labour intensive.

“Companies rely on electricity for production and if they want to survive they will have to buy electricity whether they like it or not,” Molapo said.

“We realised that if the tariffs increase by 25.4 percent, in a year our electricity bill will have increased at a rate of M12 million, meaning in a month the company will have to pay M1 million,”he said.

Molapo said this is a lot of money.

“Meanwhile, the inflation rate is at 6.6 percent, and LEC should be aligning itself to this rate rather than go over the inflation rate by over 20 percent,” he said.

Molapo said it would be sad if the group which employs about 10 000 workers were to be forced to retrench because of the high utility bills.

“25.4 percent is a ridiculous increment. The government just increased salaries for public servants by 6 percent and other companies lower than inflation, we request the same from LEC,” Molapo said.

The Consumer Protection Association (CPA), which was present at the public hearing, said Lesotho is already battling a high unemployment rate and if the electricity tariffs are increased it would not be fair for those who are already struggling to make ends meet.

Nkareng Letsie,the Programme Director of CPA, said “industries will be facing unbearable increases in input costs, which may perpetuate the bad spell that prevails in our economy”.

“We can therefore say that our brother is not acting in good faith for the industrial growth and poverty alleviation,” Letsie said.

“We all need to take our share in poverty reduction and creation of 10 000 decent jobs per year,”she said.

The presenters at the LEWA hearing said the LEC should tread carefully because over 40 000 people are working in the textile sector and it would be a pity if some of them were to lose their jobs.

They said they were concerned that if these firms shut down because of increased production costs and lack of markets thousands of Basotho would be thrown onto the streets.

The textile industry is the largest employer after the civil service with over 40 000 workers employed in the sector.

“We should be aware that these firms can close and move to countries where they can make better profits than stay where they may run losses,” one of the participants said.