The Lesotho Electricity Company (LEC) is in financial difficulties due to the high costs of importing electricity from South Africa and because of huge debts it owes to service providers.
But the parastatal has dismissed as false reports that it had already gone to the government cap in hand, begging for a M100 million bailout.
Nonetheless, so dire is its financial situation that it has no funds to pay employees' annual bonuses which are due at the end of this month.
The LEC has therefore agreed on a payment plan with its staffers to stagger the bonus payments and ward off an industrial action they had contemplated to try and compel the payments, the utility's new Managing Director, Mohlomi Seithleko, said.
To illustrate how power imports are contributing to these financial difficulties, the LEC will pay M38 million to Eskom for 24 Megawatts of power at the end of this month. The power utility would only have used M2 million to pay the Lesotho Highlands Development Authority (LHDA) for the same amount of power were it not for the breakdown of one of the three turbines which generate electricity at the 'Muela Hydropower Station in Butha-Buthe.
The turbine is currently under repairs, forcing the LEC to import replacement electricity from South Africa.
'Muela produces 72Megawatts (MW) when in full swing, while the country needs 200MW. The LEC must therefore import the remainder from Eskom and Mozambique's EDM. The Ramarothole solar power plant in Mafeteng produces power during day time only because of lack of storage facilities and is not yet a significant factor in ensuring constant power flows in Lesotho.
Mr Seithleko told the Lesotho Times yesterday it was therefore clear that Eskom's high prices had contributed to the utility's current financial problems.
He said 'Muela was currently only producing 48MW as only two turbines were working. Each produces 24MW.
"It costs us M2.42 to render electricity services to customers whom we charge M1.41 on average, which means we are running at a huge loss, thus struggling to meet obligations due to the tariffs that are not cost reflective," Mr Seitlheko said.
"Electricity usage reaches its peak between June and August each year due to the cold winter season. Therefore, the 'Muela turbines are expected to be in full swing during this period. However, one is still down.....
"They (LHDA) promised it will be up early July. Now that it was not working in June, we are going to pay Eskom M38 million compared to the M2 million we would have paid the LHDA. During this peak season, we buy a unit at M5.89 from Eskom whereas an LHDA unit costs us M0.12 throughout.
"We are already working on the plan to supply the country during the six months from October to March when the 'Muela plant will be under maintenance. Eskom has already promised to meet our demands. We are already in talks with the government to chip in as we would need to import more electricity then. The Ramarothole plant is not helping much because it only produces during the day."
Mr Seitlheko said they were going to pay the workers' bonuses in intervals from this month-end due to the financial problems.
"I will not lie. Yes, we do have financial problems. It is a policy issue to pay employees bonuses at the end of June each year but our finances are not allowing us to do so. We had proposed to the employees to pay them in December when our cash flows would be better as operating costs are not that high in summer. However, they refused.
"We had to negotiate and find common ground. The decision reached this morning was that we will pay them in intervals, starting from the bottom staff layers this month-end.
"The supervisors to middle management will be paid in July, while senior management will be paid in the two months of August and September. This will enable us to manage the cash flows whilst also avoiding the industrial action which was on the cards."
Mr Seitlheko also rubbished allegations that they had already sought a M100 million financial bailout from the government. He said they were yet to meet the LEC board regarding the LEC financial situation, which will then advise on a way forward.
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"We owe contractors and suppliers whom we are working hard to pay in order not to destroy their businesses as they also have bills to pay. However, we also have customers who owe us a lot of money whom we cannot just rush to cut supplies for due to their strategic importance in the country. Some are essential service providers.
"We are currently preparing a financial analysis which we intend to present to the board next week. This will reflect how much we owe and what we are owed, and the board will advise on the next steps to take.
"This issue is therefore still internal as we are yet to present it to the board. So it cannot be true that we have already sought a bailout....."
The Lesotho Tribune newspaper had claimed that the LEC had already asked for a M100 million bailout from the government. Mr Seitlheko said that was not true at all.
