LEWA’s Christmas coup

Rushed M2.20 tariff for Chinese firm ignites public fury, questions of capture

NTHAKO MAJORO and

TEBOHO KHATEBE MOLEFI

MASERU – Electricity regulator, the Lesotho Electricity and Water Authority (LEWA), stands accused of a shocking abdication of its duty to protect consumers after its newly appointed board rammed through a highly contentious M2.20 per unit electricity tariff for Chinese company Beijing Jingyuntong Technology (BJT) over the 2024 Christmas break – a decision now facing blistering condemnation from Parliament and the public alike.

The timing, the lack of due diligence, and the potential catastrophic impact on consumer prices have ignited a firestorm, raising profound questions about regulatory capture by members of cabinet and the influence of a shadowy tariff advisor linked to South Africa’s state capture scandal, according to Public Eye enquiries.
Appearing before the furious Public Accounts Committee (PAC) last week, LEWA executives faced a grilling over the extraordinary timing of the tariff approval.

PAC Chairperson ‘Machabana Lemphane Letsie laid bare the scandal: the LEWA board, appointed mere two days prior, convened on either December 23 or 24, 2024 – deep within the Christmas holiday period – specifically to approve the M2.20/kWh rate for BJT.

While LEWA directors feebly denied meeting on Christmas Day itself, insisting it was December 23, they utterly failed to convince the PAC of any legitimate urgency justifying such a rushed, holiday-interrupting session for a major tariff decision affecting the national utility, the Lesotho Electricity Company (LEC), and ultimately Basotho consumers.

Chairperson Letsie’s questioning cut to the heart of the matter, asking “what was the reason behind the board’s meeting on Christmas day to consider this tariff? . . .  This means customers will have to pay in excess of M4.00 for a unit.”

She posed the damning question resonating across the nation: “Would it be wrong to surmise that you were called in to just rubber stamp an already made decision made by someone somewhere?” The implication of a pre-ordained outcome, forced through by a compliant new board before proper scrutiny could occur, hangs heavy over LEWA.

The M2.20 tariff approval is not just controversial for its timing, its substance is deeply alarming. The PAC highlighted that this rate, paid by LEC to BJT, would inevitably force consumer tariffs far above the already burdensome M4.00 per unit – a crushing cost in a nation grappling with poverty.

This decision appears made in isolation, blatantly disregarding the annual, government-subsidized electricity tariff increases that have relentlessly squeezed household budgets for years.

Compounding the recklessness is LEWA’s apparent reliance on questionable expertise. Chairperson Letsie bluntly told LEWA CEO, Motlatsi Ramafole, “to be honest with you, you didn’t make proper research. Whoever advised you did not have time to even go and check, let alone about something that Lesotho lacks its own expertise.”

This points to a fundamental failure in LEWA’s due diligence process, outsourcing critical analysis to an LEC advisor whose capabilities and independence are now suspect, especially given the shadow of state capture linked to figures like Robert Opini.

The mention of a suspect tariff advisor as LEC tariff advisor resonates chillingly given the background material on Robert Opini. While not explicitly named as the LEC advisor in this specific hearing, Opini’s history as an Energy Tariffs Specialist at Eskom during South Africa’s state capture era is deeply relevant to understanding the type of risk LEWA may have courted.

Opini’s role at Eskom placed him squarely within the Zondo Commission’s investigations. He was involved in Eskom’s tariff structuring and submissions to NERSA, processes suspected of manipulation to benefit entities like the Gupta network.

While not a central figure, his work on tariffs intersected with the corrupt coal procurement – Tegeta Exploration – that fueled unjustified price hikes.

The Zondo Commission criticized Eskom’s lack of transparency in tariff determination, implicating specialists like Opini in failures to properly justify pricing models, enabling financial mismanagement.

Although Opini wasn’t directly charged, his tenure exemplifies how tariff specialists operating without stringent oversight and integrity can become conduits for skewed decisions that burden consumers and benefit select interests.

The PAC’s specific reference to LEC’s “dubious and suspect tariff advisor,” combined with LEWA’s admitted lack of internal expertise and the rushed, opaque approval of the BJT tariff, creates a disturbing parallel. It raises the critical question, has Lesotho imported the very vulnerabilities that crippled Eskom?

The PAC further exposed LEWA’s inconsistent and arguably negligent approach to consumer protection. Chairperson Letsie highlighted the grotesque tariff disparity where rural residents, like those in Matsoaing, Mokhotlong, pay a staggering M5.14 per unit – more than double urban rates.

CEO Ramafole’s defense was startling, he said the LEWA doesn’t regulate off-grid tariffs like Matsoaing with the same rigor as LEC prices, instead merely “helping” the Department of Energy with analysis, claiming these are “cost-effective” and unsubsidized.
This explanation provoked outrage from PAC members.

Thabiso Lekitla directly challenged Ramafole, asking “is it not LEWA’s responsibility to protect consumers from independent producers charging high prices?”

Dr Tšeliso Moroke delivered a legal rebuke, citing the empowering Act: “The Act lists those powers from A up to E… We cannot have these independent power producers who will do as they wish while we have the law.”

Moroke emphasized the Act mandates LEWA to consider analytical aspects of tariff-setting for all electricity, granting it clear regulatory flexibility. LEWA’s selective application of its powers, leaving rural consumers exposed to exorbitant, unregulated prices, appears to be a blatant dereliction of its statutory duty.

The LEWA board’s Christmas-time approval of the M2.20 tariff for BJT reeks of impropriety and disregard for due process and public interest. The PAC hearing exposed indefensible timing, consumer betrayal, due diligence failure, regulatory abdication and echoes of South African state capture.

Chairperson Letsie concluded that “deeper consultation was needed” on this questionable decision and announced the PAC would seek a legal interpretation of LEWA’s powers. This scandal transcends a single tariff, it strikes at the heart of regulatory integrity in the country.

LEWA’s actions demand a comprehensive, independent investigation. Consumers are already burdened by high electricity costs, deserve a regulator that fights for them, not one that signs away their interests during the Christmas break under the shadow of suspect advisors.