Government And LEWA Setting LEC Up For Failure? Part II
In this week’s analysis we zoom in on the study commissioned by Lesotho Water and Electricity Authority (LEWA). The study was intended to establish the impact of the lifeline tariffs for electricity and water supplies in Lesotho.
Our analysis will be divided in three parts, Part 1: how lifeline tariff is bankrupting LEC, Part 2:diagnosis of LEC’s real problems and Part 3: A 2002 act will sink LEC in couple of years
The report focused on the Electricity Supply Industry (ESI) while a second report focuses on the Urban Water and Sewerage Services (UWSS).
In today’s issue we zero-in on what REAL issues are in relation to LEC and its ability to fully meet its mandate. We believe the political noise surrounding LEC challenges are not real…rather a short – term reactionary views, synonymous with our political environment.
Part 2: diagnosis of LEC’s real problems
The real challenges facing Lesotho Electricity Company can be summarised by the below:
- Incorrect application of lifeline tariff by LEWA
- Government of Lesotho policies
- Bulk power imports
Incorrect application of lifeline tariff by LEWA
The Cost of Service Study (CoSS) that recommended the introduction of a lifeline tariff included the recommendation to recover the income lost through higher tariffs at higher levels of consumption.
The negative impact of the lifeline tariff on LEC financial performance took place because this cross-subsidy was not implemented. The failure to implement the cross-subsidy also leads to errors of inclusion for higher-consumption domestic customers who benefited even though the majority do not fall under the ‘poor and vulnerable’ category.
This support needed to be targeted and limited to avoid subsidising users who are able to pay (i.e., not electricity or energy poor). The CoSS, based on the poverty line, recommended a lifeline tariff of 0.5 to 0.6 M/kWh (2017/18 tariffs) for a threshold of up to 30 kWh/month, which was 35%-42% lower than the existing domestic tariff of 1.37 M/kWh.
To cross-subsidize the lifeline consumption and hence maintain the financial standing of the utility company, the CoSS recommended that other tariffs would need to increase. The recommended standard domestic tariff would need to increase to 1.79 M/kWh with subsequent inflationary adjustments as demonstrated by Figure 46.
Tariffs for all other customer categories would require an uplift of 4.5%, as shown in Figure 47. Comparing both Figure 46 and Figure 47, it is evident that the biggest discrepancy for cross-subsidizing the lifeline tariff has been in the domestic customer category, with the implemented standard domestic tariff falling short of the recommended values by around 25% to 30%.
This story is not free to read…
Alliance Insurance and Hill Buster Partner for Comrades Marathon Preparation
In an exciting development for the running community, Alliance Insurance has joined forces with Hill Busters for an intensive training session aimed at preparing athletes for the 97th Comrades Marathon. The partnership is named “Alliance Hill Buster’s Last Long Run,” kicked off on Tuesday morning with determination.
Scheduled for the 4th of May 2024 for Comrades Marathon, Ultra Marathon promises to be a test of endurance and resilience. Stretching from Durban to Pietermaritzburg in South Africa, this iconic race draws athletes from around the globe.
According to Limakatso Mokobocho, Alliance’s Public Relations and Corporate Communications Manager, the collaboration with Hill Busters is a strategic move to support local talent. With only two marathons planned under this partnership, Alliance has contributed M100, 000.00 towards essential logistics, including attire, vehicles, and medical support.
Notably, the Ultra Marathon is not exclusive to seasoned athletes; it welcomes all interested Basotho runners. The registration fee stands at a modest M100.00, making it accessible to a wide range of participants. Furthermore, Alliance will commend those who conquer the challenging 65km course with well-deserved medals.
Hillbusters’ Club Manager, Hlomphang Nkalai, outlined the rigorous selection process for the Comrades Marathon.
“Only athletes who complete the Ultra Marathon within a time of 5:50 will qualify for the prestigious event. These qualifiers will then have four weeks to recuperate before taking on the ultimate test of endurance.” Said Nkalai.
Traditionally held in Mafeteng, this year’s Ultra Marathon will commence from Masowe 3 to Mants’ebo, passing through routes of Koro-Koro, Mahlabatheng, and then Bypass before returning to Masowe 3. Remarkably, this marks the fifth consecutive year of the event, driven by the collective efforts of Hill Busters’ members and generous donations.
Among the athletes gearing up for the challenge is Paul Machachamise, whose 20 decade-long journey in the Comrades Marathon underscores the significance of rigorous preparation. Machachamise emphasized the importance of adequate training to mitigate any potential complications during the marathon.
CMM suspension threatens club’s stability
Bantu Football Club’s Chief Marketing Manager (CMM), Pule Mosoatsi has been suspended from all club activities by the League Management Committee. The suspension, effective for the remainder of the 2023/24 season and the entirety of the 2024/25 season, follows a significant dispute with the league committee.
The saga began when Mosoatsi, serving as one of the 28 members on the Workers Committee responsible for People’s Cup activities, witnessed two members of LCS Football Club allegedly selling tickets despite LCS’s non-involvement in the tournament. He was suspended for allegedly failing to disclose the identities of the LCS members.
In a move of transparency, Mosoatsi relayed this information to the league committee, highlighting the discrepancy between the club’s actions and its official participation status. This comes after Mosoatsi’s reply to the one of the media houses’ social media post where the league accused the workers’ committee for misappropriation of funds.
However, instead of being commended for his honesty, Mosoatsi found himself at odds with the league committee, leading to his suspension without a disciplinary hearing. The decision, made without following proper procedures, has raised eyebrows and speculation of ulterior motives within the league.
Bantu General Manager Poosela Pule expressed dismay at the handling of the situation, emphasizing that Mosoatsi’s suspension undermines the club’s operations and casts a shadow over its integrity.
He further portrayed that the issue should have been handled by the committee and not directed at Mosoatsi personally, since he was given a go ahead to attend such claims by the committee.
“He was not given the chance to defend himself or clarify the situation through due process of not being called for hearing,” said Pule, highlighting the unfairness of the league’s actions.
Furthermore, Mosoatsi’s absence poses practical challenges for Bantu FC, as he played a pivotal role in marketing the club and managing sponsor relationships. Without his expertise and dedication, the club and its sponsors stand to suffer significant setbacks.
Nurses worried over high rate of unemployment
Maseru, Lesotho
Lesotho Nurses Association has petitioned Parliament of Lesotho to address high rate of unemployment of nurses. The nurse training institutions produce an average pool of 200 nurses and midwifes annually at certificate, diploma and bachelors level, with majority at diploma level.
The letter dated 23 April 2024, outlines Lesotho Nurses Association’s concerns regarding the high unemployment rate of nurses. Notably, the association points out that among unemployed nurses, majority finds themselves wanting as in 2020 unemployment rate of nurses and midwives at 28.43% which was even 4% higher than the national unemployment rate of 24%. Emphasizing there is a 33% gap between the financial space and what is required to guarantee employment for all health workers in the supply pipeline.
Furthermore, the student nurses are supported financially by the Government of Lesotho through National Manpower Development Secretariat (NMDS) and subventions respectively. They stated growing unemployment of nurses calls for immediate intervention by the oversight institutions like Parliament of Lesotho as it weakens value of the massive investment in training nurses. The international council of nurses estimates the global shortage of nurses at 6 million and estimated to increase to 13 million in the next decade.
Additionally there is a growing appetite of migration by nurses in Lesotho as 86% are considering migration although there are structural challenges caused by Lesotho’s red list grading by Health Organization. Lesotho Nurses association states that high income countries with existing diplomatic relations with Lesotho such as the United States, the United Kingdom and Canada as well as the gulf regions are actively looking for nurses to fill their nursing post across their health sector.
Moreover, they indicated that international center of Nurse Migration reported in 2016 66% nurses in the United States alone remitted more than 10% of their income to their relatives in their home countries totaling to USD1.6 Billion.
Lesotho Nurses Association emphasized that they call on the Parliament of Lesotho to urge the Government of Lesotho to establish a structured nursing labour migration through bi-lateral agreement with the high income countries to address chronic unemployment of nurses. With this, Lesotho will benefit economically through remittances, contribution to the health system by returning nurses, exchange programs with partner countries and support for education of more nurses and other critical sectors by partner countries. They also stated that they are committed to support the Parliament and the Government of Lesotho throughout this process.
De Beers Moving Auctions Head Office to Botswana
London, UK
De Beers Group announced on the 25 April, its decision to relocate the De Beers Group Auctions business headquarters from Singapore to Botswana. According to De Beers this strategic move is part of De Beers’ efforts to streamline operations, enhance efficiency, and further develop the diamond sector in Botswana.
“The relocation of the Auctions headquarters to Gaborone reaffirms De Beers Group’s commitment to the development of Botswana’s diamond industry,” De Beers statement read.
It demonstrates confidence in the country’s capabilities and growth agenda. De Beers Global Sightholder Sales successfully moved from the United Kingdom to Botswana in 2013 and has been operating in Gaborone for over a decade. The move of the Auctions business headquarters is expected to improve efficiency, strengthen partnerships, and support the development of key diamond industry skills in Botswana.
During the relocation process, De Beers Group Auctions will temporarily pause operations and sales events to facilitate a smooth transition and ensure uninterrupted high-level service for customers.
Al Cook, Chief Executive Officer for De Beers Group, expressed his satisfaction with consolidating the global diamond trading business under one roof. He noted the successful operation of the Global Sightholder Sales business in Botswana for 11 years, making the transfer of the Auctions business a logical and positive step. Cook expects the move to drive cost efficiencies, meet customers’ needs, and further develop Botswana’s diamond sector.
Emma Peloetletse, speaking on behalf of the Government of Botswana, emphasized the significance of De Beers’ Auctions business relocation to Botswana. She highlighted Botswana’s growing role as a global hub for the diamond industry and the positive impact on the economy and skills development in the sector.
The relocation of De Beers’ Auctions headquarters from Singapore to Botswana signifies a milestone in the development of Botswana’s diamond industry and strengthens the country’s position as a key player in the global diamond trade.
How Un-American!
The decision by United States (US) lawmakers to pass a bill targeting TikTok, a popular short-form video app owned by China-based ByteDance, is a direct assault on the fundamental values enshrined in the US Constitution. The bill, which passed by a wide margin in both the Senate and the House, gives ByteDance up to one year to sell TikTok to a US-based company or face a ban from American app stores.
This move, ostensibly motivated by concerns over data privacy and censorship, sets a dangerous precedent that undermines the First Amendment rights of millions of Americans who use TikTok as a platform for creative expression. By forcing TikTok to sell or face deletion, lawmakers are effectively stifling free speech and limiting access to a popular form of social media.
TikTok’s head of public policy for the Americas, Michael Beckerman, has rightly pointed out that the bill violates the First Amendment, which guarantees freedom of speech. Beckerman has indicated that TikTok will challenge the legislation in court, a move that is supported by precedent. In 2023, a federal judge in Montana blocked a state ban on TikTok, ruling that it violated users’ free speech rights.
The concerns raised about TikTok’s data privacy practices and its potential to censor content are not legitimate, they should be addressed through transparent and accountable means, not by trampling on the constitutional rights of American citizens. The passage of this bill is a troubling indication of the erosion of democratic values in the United States…
It is worth noting that similar bans on TikTok have been implemented in other countries, such as India, where the app was banned in 2020 following safety concerns. However, these bans do not justify a blanket restriction on TikTok in the United States, where freedom of speech is a foundational principle.
It’s shocking that the land of the free and brave wants to dictate to Americans where their source of information and entertainment should be, this sounds like a move from a third world country, it’s appalling!
Minister of Finance at crosshairs with Petroleum Fund CEO
MASERU
A Notice of Motion filed by Petroleum Fund Chief Executive Officer, Mr. Thato Mohasoa caused a stir that involved the Minister of Finance and Development Planning- Dr. Rets’elisitsoe Matlanyane and board of directors of Petroleum Fund.
In the founding affidavit that was written on 6 March 2024, Mohasoa gave a brief account of his background where he stated that he received his letter of employment on 26 April 2019 which was meant to come into effect on 1 May 2019. The terms of the letter stipulated that the offer was made in compliance with Section 13(1) of the Lesotho Petroleum Regulations, 2009. Apart from the duration (5years) of the contract, the letter included details of his direct cash renumeration, indirect renumeration (fringe benefits) and an indication to accept or decline the offer. The contract was dated to expire on 30 April 2024.
Mohasoa went on to declare that on 30 January 2024, he received formal correspondence communicating the Board’s intention to recommend renewal of his appointment to the Minister of Finance and Development Planning to which he duly responded that he accepts this renewal of contract. As communicated, on 31 January 2024, the chairperson of the Board put down in writing their decision as the Board including their motivating factors and justifications thereof.
The decision was reached in accordance with Section 13 of the Lesotho Petroleum Fund Regulations, 2021 read together with clause 2.4 of the Fixed Contract entered between the Chief Executive Officer and the Fund. “According to Section 13(2) of the Regulations, the renewal of the CEO’s contract is subject to a good performance. One of the key expectations in the appointment of the current CEO was an assurance that he would provide the necessary transformative leadership to the organization and assist in graduating it from an otherwise moribund institution, to the one that would be impactful on achieving its core mandate of ensuring that there is adequate security of supply of petroleum product in the country.
In all fair assessment, the CEO achieved that feat and has provided a leadership that has transformed the Petroleum Fund into one of the key strategic State-Owned Enterprises, whose corporate presence and institutional impact is felt, both locally and internationally…” The Petroleum Fund board chairperson went on to give detailed explanations on how the CEO achieved these as well as the commendable goals he has attained thus the board felt he was worthy of another run.
On 15 February 2024 addendum to the fixed contract that was signed during the month of July 2019 which was amended such that the contract is valid until 20 April 2024. It was a let-down on 16 February 2024, when the Minister of Finance penned down a letter declaring denial of the renewal of contract of the CEO and further instructing that the Board advertise the said position.
Section 4.4 of the affidavit stated the following:
“I wish to take the court into my confidence and assert that the response is glaringly framed in the tersest of terms to the effect that the renewal of my appointment is not approved without more. This is quite surprising when being juxtaposed against the motivation made by the Board in motivation of renewal of my contract. I have been advised and believe the same to be true that this is a grave administrative malady on the part of the Minister of Finance and Development Planning for the following reasons:
a. No reasons have been provided for the rejection of my proposed engagement and renewed contract.
b. Regulation 13 is framed in the preemptory terms to the effect that the Minister ‘shall’ on the advice of the Board, appoint Chief Executive Officer (CEO)…
c. The Minister of Finance and Development Planning bore no discretion to reject the recommendation and to further direct re-advertisement without a firm legal basis and there is such basis justifying the refusal to yield to the recommendation made by the Board of Petroleum Fund in the context of the case on the radar.”
The nature of the application was as thus, wants the Minister of Finance (1st Respondent) to be instructed to provide the court with the record of proceedings, deliberations and or resolutions that prompted her to negate the recommendation of the Board of Petroleum Fund (3rd Respondent).
Upon waiting for these proceedings, Mohasoa wants the Minister of Finance, and the Petroleum Fund (2nd Respondent) to be prohibited from re-advertising the position of Chief Executive Officer of Petroleum Fund. He also wants The Board of Petroleum Fund to be restricted from initiating any meetings which are meant to deliberate on matters involving the re-advertisement of Petroleum Fund’s Chief Executive Officer position which was set to take place on 19 March 2024.
Mohasoa exercised his prima facie right, citing the prejudice that has been bestowed upon him. He further alluded that that the decision made by the Minister may have been influenced by underlying political factors. The intervention of the court was sought as he believed that this decision was contemptuous. Moreover, “… Her letter of refusal does not even mention the basis of her decision…”
Mohasoa wants his full rights to continue with his duties as Chief Executive Officer during this period. According to his court papers, grounds for which the Minister declined the renewal of his contract should be regarded as ‘unlawful and or illegal’, so was dismissing the recommendation made by the Board of Petroleum Fund. Therein, he wants the court to instruct the Minister of Finance to renew the Applicant’s contract just as the Board of Petroleum Fund had recommended on 30 January 2024.
