Lesotho: Lesotho Electricity Company Plunged Into Financial Woes

0
77

The Lesotho Electricity Company (LEC) is in financial difficulties due to the high costs of importing electricity from South Africa and the huge debts it owes to service providers.

The company’s situation is so dire that it has no funds to pay employees’ annual bonuses which are due at the end of this month, according to a report by Lesotho Times.

The report said the company has agreed on a payment plan with its staffers to stagger the bonus payments and ward off an industrial action they had contemplated.

The power utility will pay M38 million to Eskom for 24 Megawatts of power at the end of this month and pay M2 million to the Lesotho Highlands Development Authority (LHDA) for the same amount of power from ‘Muela Hydropower Station in Butha-Buthe.

Speaking about the company’s financial situation, the Managing Director of Lesotho Electricity Company, Mr Mohlomi Seithleko, confirmed that Eskom’s high has contributed to the utility’s current financial problems.

He said Muela was currently only producing 48MW as only two turbines were working.

“It costs us M2.42 to render electricity services to customers whom we charge M1.41 on average, which means we are running at a huge loss, thus, struggling to meet obligations due to the tariffs that are not cost reflective,” Mr Seitlheko said.

“Electricity usage reaches its peak between June and August each year due to the cold winter season. Therefore, the Muela turbines are expected to be in full swing during this period. However, one is still down.

“They (LHDA) promised it will be up in early July. Now that it was not working in June, we are going to pay Eskom M38 million compared to the M2 million we would have paid the LHDA. During this peak season, we buy a unit at M5.89 from Eskom whereas an LHDA unit costs us M0.12 throughout.

“We are already working on the plan to supply the country during the six months from October to March when the Muela plant will be under maintenance.

“Eskom has already promised to meet our demands. We are already in talks with the government to chip in as we would need to import more electricity then. The Ramarothole plant is not helping much because it only produces during the day.”

Mr Seitlheko said they were going to pay the workers’ bonuses in intervals from this month-end due to the financial problems.

“I will not lie. Yes, we do have financial problems. It is a policy issue to pay employees bonuses at the end of June each year but our finances are not allowing us to do so. We had proposed to the employees to pay them in December when our cash flows would be better as operating costs are not that high in summer. However, they refused.

“We had to negotiate and find common ground. The decision reached this morning was that we will pay them in intervals, starting from the bottom staff layers this month-end.

“The supervisors to middle management will be paid in July, while senior management will be paid in the two months of August and September. This will enable us to manage the cash flows whilst also avoiding the industrial action which was on the cards.”

 

 

Source: https://energynewsafrica.com