Solar energy deal: Moleko in offense mode
TEBOHO KHATEBE MOLEFI and
MOTSAMAI MOKOTJO
MASERU – Acting Minister of Energy, Mohlomi Moleko, has been unleashed in defence of his finance counterpart, Dr Retšelisitsoe Matlanyane, over the contentious US$350 million Beijing Jingyuntong Technology (BJT) contract for Phase II of the Ha Ramarothele Solar Energy project.
This week Moleko, unapologetically, told Public Eye that indeed Matlanyane last year signed the controversial deal with BJT on behalf of government, he called the signed document a ‘financing agreement’ and not a contract as reported various articles previously carried by this publication.
“It’s a financing agreement. All such deals are signed by the Minister of Finance,” Moleko, who is also the natural resources minister, said, adding that “it’s a build-transfer-operated model, meaning I can’t sign such an agreement when the finance minister is around.”
“When it’s a loan agreement, she (Matlanyane) will take the lead as long as it involves the government giving guarantees, but when she takes it to cabinet, she will need the concurrence of the Minister of Energy.
If you were privy to cabinet minutes, you would actually see that this issue was discussed in three meetings,” Moleko boldly asserted.
He went as far as curating the process of applying for a tariff, which ultimately ends with the regulator Lesotho Electricity and Water Authority (LEWA) for approval.
“The LEC (Lesotho Electricity Corporation) hires a consultant, who will be paid by the World Bank, who assesses whether the tariff is acceptable; how much will the Independent Power Producers (IPP) charge; how much profit will they make over a certain period of time,” Moleko said while refusing to state the veracity of the consultant and the utility board and EXCO’s refusal to accept the M2.20 kilowatt price to be charged by BJT under the Matlanyane agreement.
“There’s no such thing,” he said when asked about the consultant’s advice.
“He would be entering into a political terrain if he gave that advice. Is the rate acceptable? It’s not the mandate of the consultant to indicate whether the price is right or wrong.”
Bizarrely, on Monday after the interview with Moleko, the Ministry of Finance released a press statement in which they castigated this publication over its not only “incorrect but also misleading” articles.
“The Ministry wishes to inform the public that the cabinet authorized the Honourable Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane, to sign a USD 53 million Build-Operate-Transfer Financing agreement for the 40 MWp solar power plant and integrated 20 MWH energy storage system located at Ha Ramarothele in the Mafeteng district.
The agreement is between the Government of Lesotho and Beijing Jingyuntong Technology Co. Limited (BJT),” the missive noted.
In justifying the deal, the statement further indicates that it’s “well within the Minister of Finance’s powers to sign this kind of agreement in terms of the Public Financial Management and Accountability Act No 12 of 2011 and Loans and Guarantees Act No. 15 of 1967 (as Amended) and Public Private Partnership Policy of 2011.”
Moleko’s unleashing comes after Matlanyane blocked these reporters on WhatsApp and direct calls when trying to seek her comment.
Before the drama, she sent an angry text noting, “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 that 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.”
Enter Moleko into the hot pan, where he went as far as telling Public Eye that he’s thinking of suing the publication over what he deemed as “defaming” and “writing lies about the minister,” a statement which he told MoAfrika FM earlier this month.
“I want to take upon myself (to sue or institute legal proceedings). You news reporters like writing lies, you need to verify your sources,” Moleko said in an interview this week.
However, a source with intimate knowledge of the deal told this publication that Matlanyane was out of her depth and confines of the law when she signed the agreement.
“LEC enters into an IPP for negotiations on the technicalities; they agree or disagree.
“What is the basis of the finance minister signing a deal of which she already signed even before going to cabinet?” the source indicated.
“Only after there’s been an accord from the Minister of Energy can Matlanyane sign; that process was not followed. She usurped the powers of the LEC and LEWA in agreeing to the M2.20 tariff; it’s fraud,” the source indicated.
This publication asked colleagues at Check-Mate Lesotho to verify what the minister has claimed. They found that according to the Lesotho Electricity Authority (LEA) Act of 2002, the Minister of Natural Resources bears the sole responsibility on transactions of this nature.
“Notwithstanding the provisions of Section 107, the Lesotho Electricity Corporation or its successor company is entitled to continue importing electricity from Eskom, pursuant to any agreements between Lesotho Electricity Corporation and Eskom that are in force on the commencement of this Act,” the LEA Act of 2002 states.
Section 107 (103) explicitly notes that “the Authority shall, before issuing the license referred to in Subsection (1), consult the Minister (of Natural Resources) on the matter.”
Last week, the LEWA Chief Executive, Motlatsi Ramafole, sensationally confirmed that the regulator’s board did indeed approve an exorbitant M2.20 tariff.
“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 startling 13-page Build Operate-Transfer Agreement for the 35MW Solar Farm and 20MW Energy Storage agreed to by the finance of 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 on, while also stating that “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 (Beijing Jingyuntong Technology).”
“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.”
While the inexplicable contract signature for the Ha Ramarothole energy deal has attracted attention from several quarters, Public Eye has learned that a feasibility study for this second phase of the project has not been conducted.
“They (authorities) have used an Environmental Impact Assessment (EIA) from Phase I, which was so bad that there’s presently colossal soil erosion and land degradation in the project areas, with an estimated cost of M28 million to rehabilitate the place.
Speaking before parliament’s Natural Resources Portfolio Committee in February last year, then Minister of Energy, Professor Nqosa Mahao, highlighted that lessons learnt from Phase I of the project included badly done Environment Impact Assessment (EIA) reports.
“Yes, these are experiences that we have had and on the issue of EIA, you can see that it was badly done on Phase I. We are going to be far off vigilant in Phase II and exercise absolute due diligence,” he said.
The Ha Ramarothole solar plant occupies severely degraded land, prompting the Ministry of Energy to announce plans to invest millions in rehabilitating the area.
“There is land degradation and soil erosion at Ha Ramarothole project construction site, we are already addressing that. We started addressing it in November, but we had limited. This year we have enough funding to rehabilitate the dongas that are worrisome,” the ministry’s officer, Mantšabeng Lifalakane, told the committee.
Such incompetence is similar to the one that has led to the World Bank team landing in Maseru this week to assess the Ha Belo and Ha Tikoe substations, which have not commenced as we speak,” this publication was informed this week.
This source with intimate knowledge of issues surrounding the controversial Ha Ramarothole energy project also indicated that before being axed former energy minister, Professor Nqosa Mahao, established a forensic team to investigate alleged corruption at the national utility company in energy-related deals.
The Lesotho energy sector finds itself confronted with this controversial yet massively expensive deal while the country enjoys the support of the European Union (EU) in renewable energy.
The overall objective of the EU energy programme in the country is to ensure energy security, improve access to reliable and affordable clean energy, and promote green growth.
Its specific objectives include increasing renewable energy generation production and energy efficiency, promotion of reliable, equitable and gender-transformative access to clean energy and the improvement of the country’s energy sector leadership and institutional capacity.
The EU contribution is €15 million and is open to additional contributions from other partners.
This support provides support to the energy sector as a whole, including public entities, private sector through business catalyst and match-making support, as well as education and vocational training actors.
In addition, the programme is expected to establish a funding mechanism including grant-based support and finance-based support for initiatives in the energy sector ranging from on- and off-grid renewable energy generation to energy efficiency.
The programme also aims to support the establishment of National Energy Fund to leverage additional resources for the vision of a Renewable Lesotho and generate employment opportunities in the sector as a whole.
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+pic of the Ha Ramarothole Solar Plant
‘…cabinet does not own this country’
MOTSAMAI MOKOTJO
MASERU – Only the courts of law will nullify the ‘corrupt’ $350 million by Beijing Jingyuntong Technology (BJT) for Phase II of the Ha Ramarothole Solar Energy project which was signed last year by Minister of Finance Dr Retšelisitsoe Matlanyane.
This is according to Basotho National Party (BNP) leader, Machesetsa Mofomobe, in an interview with Public Eye this week.
“Government should have been honest and transparent about deal thus they issued a vague statement from Finance; the missive lacks details about the dates on which processes of approving the tariff were done,” Mofomobe said.
“LEC (Lesotho Electricity Company) should have had engagements with IPP (Independent Power Producer) and agreed on the tariff then write to LEWA (Lesotho Electricity and Water Authority) for approval,” he said, adding that at that stage public consultations should have happened.
The BNP supremo indicated that after such the LEC then informs the Minister of Energy who presents a paper to cabinet “but since this deal is corrupt” Matlanyane “signed it retrospectively even before cabinet approved.”
“The courts will nullify this deal,” Mofomobe noted while urging the finance ministry to produce a timeline of events that led to the inking of the agreement.
When contacted on the same matter, Democratic Congress (DC) deputy leader, Motlalentoa Letsosa, echoed Mofomobe sentiments describing the agreement as “corrupt to the core.”
“I suspect that there are people who will or have personally benefitted from this crazy deal,” a fuming Letsosa said.
“Electricity is already expensive hence one will not be surprised when consumers find ‘creative ways’ to access it” he indicated, adding, “Ultimately government will have bail out the utility company since customers will not be able to afford the ballooning tariff price.”
The DC deputy leader also noted that the line ministry being Energy should have been at the forefront before Finance approved the deal.
“Energy has the technical skills to assess the viability of such agreements then only after satisfying itself Finance will also assess whether there’s value for money, but in this case procedural steps were not followed,” Letsosa told this publication.
The National Assembly Chairperson of Chairs, Mokhothu Makhalanyane, said they are concerned with such agreements which will end up being paid for by future generations.
“If such loans are inked they should be scrutinized for the value they will inject into the national economy; was there no cheaper alternative?” Makhalanyane continued, adding “There needs to be transparency regarding the details of that deal.”
He also indicated that if the deal is above board and was done with the confines of the law, there shouldn’t be a resemblance of hesitation when details about the agreement are required.
“I am very unhappy with the manner in which the situation has been handled; cabinet does not own this country,” a seething Makhalanyane noted.
