LEWA: Nothing sinister about Ramarothole tariff
TEBOHO KHATEBE MOLEFI and
MOTSAMAI MOKOTJO
MASERU – Lesotho Electricity and Water Authority (LEWA) Chief Executive, Motlatsi Ramafole, has sensationally confirmed that the regulator’s board did indeed approve an exorbitant tariff of M2.20 for China-based Beijing Jingyuntong Technology (BJT).
This comes after revelations by Public Eye article – Energy deal taints minister… Dr Retšelisitsoe Matlanyane signs a Frazer Solar-style agreement for phase II of the Ha Ramarothele Solar Energy project.
“Yes, we did approve the tariff on the basis of financial analysis that was presented to us, Ramafole said,” adding that they convened on December 23, 2024. “We (the board) were not coerced into accepting the rate; it’s our job to make such analysis, especially since we sat during the week, not on a holiday,” he said when quizzed about the timing.
“Eyebrows shouldn’t be raised,” an irritated Ramofole told this publication. The controversial deal, according to sources, was signed by Minister of Finance and Development Dr Retšelisitsoe Matlanyane last year without cabinet approval. The Ha Ramarothole Solar PV Park is a 70 MW solar PV power project located at Ha Ramarothole in the Mafeteng district.
According to Global Data, which tracks and profiles over 170 000 power plants worldwide, the project is currently at a partially active stage. It is being developed in multiple phases. The project was commissioned in June 2023 following the completion of Phase I.
The Phase II agreement paves the way for a Build-Operate-Transfer Agreement of a 35 Megawatts (MW) solar farm and a 20 MW energy storage system, which is aimed at the development, construction, and operation of a photovoltaic (PV) solar power plant with integrated energy storage capabilities – also in the Ha Ramarothole area.
Public Eye has since heard from two sources, independent of each other, that Matlanyane was strongly castigated by the cabinet for signing the deal without its approval for the $350 million project.
“What she did is blatant corruption, which is similar to the Frazer Solar deal; remember the issue (former Minister in the Prime Minister’s Office, Temeki) Tšolo is being charged in that he had no approval and portfolio to pen an agreement of that nature with any company on behalf of the government.
Matlanyane went ahead usurping the powers of the Ministry of Energy; officials warned her of the dangers of the agreement, insisting that it was not sustainable,” one source noted.
But Matlanyane, according to another source, went ahead and negotiated a tariff price with the Chinese firm, where normally and legally, the utility, being the Lesotho Electricity Company (LEC), negotiates with the Power Purchase Producer; if terms are agreed, a Power Purchase Agreement is issued by the former.
“The minister did not even consult LEWA (Lesotho Electricity and Water Authority) since public consultations are key when such an issue of tariffs is required,” the source revealed to this paper.
The source added: “Her trip to China with LEC Managing Director, Mohlomi Seitlheko, and the Principal Secretary in the Ministry of Energy, Tankiso Phapano, was paid for by the Chinese company last year, where the deal was inked.”
Another source with intimate knowledge of the agreement indicated that last month, Seitlheko hurriedly asked the LEC board and EXCO (LEC Executive Committee) to approve tariffs for phase II of Ha Ramarothele.
“The EXCO and the board refused to budge, noting that the M2.20 per kilowatt would cripple LEC. Subsequently, three weeks ago, the World Bank consultant gave the utility company a consultant who is an expert in renewable energy; he confirmed to the board and EXCO’s apprehension about the costs that were being requested,” the source indicated.
That is when the LEC MD, without the authorization of the board and EXCO, wrote to LEWA informing them that they had agreed to approve the tariff.
“LEWA, afterwards approved the tariff and then proceeded to inform the LEC; however, EXCO members were perplexed since they had refused to grant the tariff. The rationale from the LEC board was that Basotho couldn’t afford the price being charged since electricity would be expensive.
The idea of having phase II is commendable since the first one doesn’t have the capacity to store electricity, hence the need for expansion, but not in this corrupt manner,” the source highlighted.
According to then LEC Acting General Manager, Makhetha Motšoari, in an earlier interview with this publication, the company finds itself deep in debt because of tariff policies, live-line costs, and bulk electricity purchases, among others – factors that have greatly affected its financial state.
Electricity tariffs in Lesotho are overseen by LEWA, which structures them to balance affordability and sustainability. According to 2024 updates, residential customers pay around LSL 1.83 per kilowatt-hour (kWh), while businesses pay a lower rate of LSL 0.376 per kWh.
Recent adjustments by LEWA include a 15 percent increase in the ‘lifeline’ tariff for low-income households and a 23 percent rise in the ‘maximum demand’ tariff for commercial users. These changes, effective over the 2024/25 and 2025/26 financial years, aim to help LEC manage rising operational costs and debt.
“These tariffs are designed to balance affordability and sustainability,” said Motšoari.
The LEC presently sells electricity to consumers at a lower rate of M1.42 per kWh. 72 Lisente cheaper than the Jingyuntong M2.20 entrenched in the Matlanyane agreement.
The startling 13-page Build Operate-Transfer Agreement for the 35MW Solar Farm and 20MW Energy Storage agreed to by the finance minister includes a clause that exempts Beijing Jingyuntong Technology from paying tax. Section 8, titled Tax and Duty Exemptions, notes: “During the construction phase, the Government of Lesotho agrees to waive all customs, duties, and value-added taxes (VAT) in respect of the importation of goods and materials necessary for the construction of the project. However, income tax is not exempt during the construction phase and shall be payable in accordance with applicable tax laws.”
Glaringly, when it comes to pricing, Section 7, read with 7.1, 7.2, and 7.3, indicates: “The price of electricity generated by the project in the first year of operation will be set at 2.2 rand/KWh, with a 5 percent (five percent) annual increase.”
“Payments for electricity will be settled in US (United States of America) dollars at the agreed exchange rate,” the document sheds light, while also stating, “Payments shall be made every 60 (sixty) days.”
Another worrying matter about the agreement is that it states in Section 2.1 that the BJT will manage the project for a period of 15 years, retaining the rights to all revenue generated during this time, including proceeds from electricity sales – which means that the government will not benefit from anything for 15 years. All revenues generated from the sale of electricity belong to BJT.
“Unless otherwise agreed in writing by both parties, any such negotiation or arbitration shall be held in Johannesburg (South Africa), and the language to be used in the arbitration proceedings shall be in English.
Conference telephones or other similar electronic or communication facilities may be used at such negotiations and arbitrations, provided always that all representatives of the Parties and the Arbitrators are able to fully participate in the negotiation or arbitration concerned and are capable of hearing and being heard by all other Parties and Arbitrators participating in the relevant negotiation or arbitration,” Section 9.7 notes.
Of critical amazement is Clause 13, which bars the government and BJT from disclosing the contents of the deal “leading to this Agreement and the information handed over to such Party during the course of negotiations, as well as the details of all the transactions or agreements contemplated in this Agreement and any matters incidental thereto.”
Our sources indicated former Energy Minister, Professor Nqosa Mahao, had been apprehensive about the deal that would “bankrupt LEC.”
“Mahao was resolute in insisting that the project should be spearheaded by his ministry but was astonished that Matlanyane was the lead. One of the reasons he was axed from the cabinet was because he refused to be part of a group of people hell-bent on making this country insolvent,” the source revealed.
When contacted for comment recently, a furious Matlanyane refused to answer questions about her role that led to the subsequent signing of the deal.
“Let’s respect each other; if you are truly a genuine journalist, you will not ask me frivolous questions since you will not even reveal your sources (of information),” she said, adding, “I am not interested.”
Soon after dropping the call, she wrote a seething text saying, “Evening…the day you would like us to talk and respect each other at our respective workplaces, you will request a meeting in an appropriate manner. Rephrase your questions, and then we will address each other appropriately about the issues you are inquiring about.”
The minister has since blocked the Public Eye reporters on WhatsApp and direct calls when trying to seek her comment, but it appears she has since unleashed Minister of Natural Resources and Acting Minister of Energy, Mohlomi Moleko, to her defense.
Moleko told MoAfrika FM last week, that this publication had “defamed” and “written lies about the minister” when asked to react to the content of the story the Public Eye ran on the BJT agreement and exorbitant tariffs the contract implies for consumers.
