This series was supported by Pulitzer Centre
The irony of Lesotho’s energy crisis is striking: the country’s dams are full, thanks to a halt in water transfers to South Africa, allowing Lesotho to maintain its hydroelectric plant. However, the nation won’t benefit from the renewable energy potential the full dams offer, as the hydroelectric generation will only resume once the maintenance is completed. Water transfers to South Africa will restart at the same time. As a result, Lesotho will continue to import electricity at crippling, ever-increasing prices to keep the lights on.
Lesotho’s reality over the last five years has been a prolonged period of drought. This coupled to the water that is sold to South Africa plunged the country into an electricity crisis, because the dams – Katse and Mohale – have been too low to generate enough hydroelectric power to meet demand from businesses and domestic users.
The toll that importing electricity takes on Lesotho’s already fragile economy was set out in a 2022 research report which shows how the country spent $52.9 million on electricity imports, making it the 80th largest importer of power in the world. The Observatory of Economic Complexity report, shows how electricity in that year was Lesotho’s fouth most imported product.
The report sets out how Lesotho imports electricity primarily from Eskom, South Africa’s state owned power utility, and from Mozambique at a cost of $43.8-million and $9.04-million in 2022 respectively.
“The fastest growing import markets in electricity for Lesotho between 2021 and 2022 were South Africa ($17.9M) and Mozambique ($389k),” noted the report.
Role of drought
The core issue is Lesotho’s reliance on hydropower, which has been severely impacted by drought over recent years. In 2020, for example, dam levels for the Katse and Mohale dams dropped significantly. Katse was reduced to a third of its capacity while Mohale fell to its lowest level of 11% in October 2020.
It was as a result of this impact that in its tariff review application 2020/2021, Lesotho Electricity Company (LEC) said the accumulated water by the Lesotho Highlands Water Project reservoirs “in the recent past rainy seasons was insufficient to meet current year water to the Republic of South Africa and electricity generation requirements at ‘Muela Plant”.
“As such LHDA had to review options, which were implemented in the current financial year which had direct impact on water obligation transfer thereby electricity at ‘Muela Plant. This situation dictated LEC to import more and expensive electricity from Eskom,” said the LEC.
The LEC has responded to these challenges by seeking annual tariff increases for electricity users from Lesotho Electricity and Water Authority (LEWA) but in their most recent application Lesotho Electricity Company’s Multi Year Tariff Application for the Period 2023/24-2025-26, it requested 23% increase for “maximum demand” category and 15% for the “lifeline’ category.
According to LEWA’s Determination document seen by MNN Centre for Investigative Journalism, “majority of the members of the public opposed tariffs increases”, some citing corruption, poor service delivery, lack of transparency at LEC and inaffordability by consumers among others.
LEWA’s determination indicates that LEC “…carried out affordability analysis in order to ensure affordability of the proposed tariffs by all customer categories. The analysis revealed that the proposed tariffs would be affordable by all customer categories”.
Despite the rejection from the larger section of the populace, LEWA approved a 9.6286 percent hike in both the “energy and maximum demand” tariff and 5.0 percent for the “lifeline tariff” and these changes came into force from April 2024.
In contrast were the findings of economics students doing energy research at the National University of Lesotho Students. Based on their inquiry into the impact of these tariff increases, they warned that the adjusted tariffs would not be affordable to low-income consumers and cautioned the LEWA that “affordability analysis conducted by LEC failed to take into account inequalities among customers”.
Imports as cause for price hikes
In its application for hefty increases for the period 2023-2025, the LEC noted that the bulk power supply costs “remain the prominent and outstanding driver behind which LEC proposes an increase in tariffs”.
“The bulk electricity costs constitute 56 – 59% of LEC’s total costs/budget over the plan/control period (increasing by 46.85%, from M805,843,473.55 expenditure in 2022/23 to M1, 183,348,581.00 for 2023/24),” he added..
The LEC further says significant increase is mainly attributable to the high cost of imported electricity, at the back of an 18.9% and 25% tariff increase from Eskom and Electricidade de Mocambique of Mozambique in 2023 respectively.
In same application, the LEC planned to purchase 474,727,626.00 KWh at M0.18 per unit from ‘Muela plant and 57,713,651.84 KWh at M0.83 per unit from Ha Ramarothole solar farm for 2023/2024 financial year.
LEC would further import 293,998,489.38 KWh from Eskom’s 132 KV Maseru Bulk at M1.45 per unit, 74,651,239.95 KWh from Eskom’s 88 KV Clarens at M1.22 per unit, 8,948,360.40 KWh at M1.99 per unit from Eskom’s 22 KV Qacha’s Nek, and 98,240,000.00 KWh at M1.95 per unit from Mozambique.
This meant that LEC would buy a total of 1,008,279,367.57 KWh at a total cost of M861-million with imported electricity making up 84% of the total cost, yet contributing only 47% of the purchased electricity.
Among other factors, the LEC says the situation is exacerbated by the shutdown of ‘Muela plant from October 2024 to March 2025, increasing the cost of bulk purchases by forcing LEC to import from external suppliers at higher prices.
Burden on smaller businesses
In a bustling town of Mafeteng, nestled some 77km southward from the capital Maseru, Mamoleboheng Tšoaeli and her fellow entrepreneurs are struggling to make ends meet.
Their small businesses – a dressmaker’s shops, a tuckshops, and a hair salons – rely heavily on electricity to operate, but the soaring prices have left them with less and less to live on each day.
“I am a mother of two children, one in grade 10 and the other in grade 7,” Tšoaeli, a single mother, shared with the MNN. She says she is grappling with providing for her children’s educational needs and household expenses.
Tšoaeli explained that at Red Cross building in Mafeteng, where she rents, there are ten tenants who share the electricity bill on a weekly basis. Due to limited income from their small businesses, they cannot afford a monthly bill. “Each tenant contributes M40 in the summer and M70 in the winter, except for a nail technician, whose equipment is believed to consume more electricity.”
Prior to the increase in electricity tariffs in April last year, Tšoaeli said they used to only contribute M20 in the summer and M40 in the winter.
Before the prices were increased, Khathang-Tema Baitšokoli, a Lesotho street vendors association, warned that “proposed tariff increases could be a concern for informal traders, including barber shops and salons, as it would increase their operation costs, which would negatively impact on their businesses”.
Speaking to MNN, president of the association, ‘Mamolise Lawrence, said the price hikes have now affected businesses especially in sectors where energy consumption is part of operational costs thereby having lower competitiveness and reduced profit margins.
Tšoaeli is not the only victim of the electricity crisis, as there are many others affected not only in Mafeteng but across the country as well. Tšiu Mutlanyana owns a tuckshop where he sells fatcakes, sausages, and cold drinks.
“To ensure the freshness of my sausages, I stock them in a refrigerator and make my own ice cubes to cool my drinks. I also do welding, producing graveyard tralies, burglar doors, and ox-yokes. The machines I use consume a significant amount of electricity,” explained Mutlanyane. He further noted that with the recent surge in electricity prices, he has seen decrease in units he is able to purchase for M30 on a weekly basis.
Malerato Makhanya another woman who earns a living through my hair salon uses electricty to “heat water for washing my clients’ hair, charging phones, lighting, and playing a radio for advertising purposes”.
“On good days, I can serve up to five clients and make up to M300,” she added.
However, during slow periods, she says: “I may go home empty-handed or with only M40 from a hair wash. Sometimes I contribute all my earnings for electricity bill and go home with nothing”.
Court battle
In April of last year, a local NGO known as Advocates for Supremacy of the Constitution filed a High Court case challenging the increase in new tariffs.
The NGO, also referred to as Section Two, is seeking a review and reversal of the tariff determination. They argue that the decision was made without the audited financial statements of the LEC for the financial year ending on March 31, 2023.
In response, the managing director of LEC, Mohlomi Seitlheko, stated in his affidavit that overturning the decision would severely impact the LEC’s ability to fulfill its functions.
Seitlheko emphasised that this would not only harm the LEC but also have negative consequences for the entire Basotho Nation, as the company is the primary electricity provider for the country.
The case is ongoing in court, with Advocate Fusi Sehapi representing Section Two, saying in an interview with MNN in December of last year that the judge’s availability has been a challenge.
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