THE percent tariff increase by the Lesotho Electricity Company (LEC) may have come at a wrong time, but the reality of the matter is that the utility company has been cash-strapped for quite some time and therefore needs a little boost to cover its operational costs.
Sept. 30, 2021
2 min read
Tariff increase welcome
- First block is for consumers using 0-30kwh
- Company needs funds to improve service delivery
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The company announced this week that the Lesotho Electricity and Water Authority (LEWA) has resolved that the LEC’s tariffs be increased by 10.3727 percent for both energy and maximum demand for all customer categories for the financial year 2021/22.
The announcement further went on to reveal that there will be a two-level block increasing tariff with lifeline tariff for domestic customers.
The first block is for consumers using between 0-30kwh, which is priced at M0.7947/kwh. The second block is for consumers using above 30kwh, which is set at M1.6235/kwh.
So, looking into the fact that the company is struggling to operate and run its affairs and meet the demand of the nation, it is only fair that tariffs are increased. As the population, we shall then wait and see if there are any improvements going forward on the customer service front.
Of course the increase comes at a back of tough economic conditions currently exacerbated by the coronavirus pandemic. However, with the rate at which the LEC is operating, coupled with poor service delivery, it is fair that the company gets a financial boost to try and improve.
Our understanding is that if tariffs are not improved, in line with the economic conditions of course, service at the company may keep on deteriorating, leading to its eventual collapse.
It would then mean even more damage than what we are already dealing with at the moment.
On the other hand, LEWA should also be applauded for its decision because initially, LEC requested a 30.9 percent increase in order to cushion its operations, citing among other things that prices for its key inputs have increased.
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The company had highlighted before LEWA that it will need a minimum of M1, 24 billion to finance its operations.
But LEWA, with its own analysis has only been able to allow for a 10 percent increase for the first time since the 2019 financial year. In the past two financial years, the company was not allowed to increase tariffs.
The only advice one may give to LEC management is for them to appreciate the increase and prioritise key areas of improvement for the betterment of the company’s operations.
Half a loaf is better than no bread at all.