WORKSHOP
ON THE TRANSITIONAL TARIFF ADJUSTMENT PLAN FOR LESOTHO ELECTRICITY
CORPORATION
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PRESS RELEASE PRIVATISATION UNIT 2nd Floor Lesotho Bank Mortgage Division Private Bag A249 Maseru.100 Contact: Makalo Ntšasa Tel: 22317902 Fax: 22317551 Email: mntsasa@privatisation.gov.ls For immediate Release Tuesday, 29th September 2003. WORKSHOP ON THE TRANSITIONAL TARIFF ADJUSTMENT PLAN FOR LESOTHO ELECTRICITY CORPORATION 1. The Privatisation Unit hosted a workshop on Tuesday 23rd September 2003 on the Transitional Tariff Adjustment Plan for Lesotho Electricity Corporation (LEC). 2. The Workshop followed a policy dialogue that took place between the Government of Lesotho and the World Bank in March 2003. The dialogue resulted in the Government approving a restructuring strategy for LEC – The Public Service Concession strategy, as the most secure way to meet the Government’s social and economic development targets. The main development target is to increase access to electricity within the county. 3. The Government has therefore committed itself to ensure through the Lesotho Electricity Authority (LEA) Act that electricity tariff structures and prices are based on sound economic principles and where possible, the tariffs should reflect the costs incurred in supplying electricity to consumers. 4. In this context, the Government of Lesotho, through the Privatisation Unit, selected SYNTEX firm of consulting engineers to develop a predictable and transparent methodology to determine tariffs that will be applied to customers connected to the electricity grids. 5. Mr. Sebastian Bernstein, the Managing Partners off SYNEX, presented the general approach of the Study and the bulk supply tariff section. In his presentation, he emphasised that in addition to avoiding discrimination among users, the tariff system should have economic efficiency, be financially viable and be simple to understand by both LEC and electricity customers. He went on to stress that the tariff system could have a subsidy incorporated in it for basic consumption of electricity for low-income households. 6. Mr. Juan Pablo Urrutia, a partner in SYNEX, delivered the second part of the presentation covering the methodology for determining the transmission and the distribution tariffs as well as the end user tariffs. Then he discussed the possible alternative options that could be considered to reduce the end user tariffs to customers. 7. The last part of the discussion during the Workshop focused on Rural Electrification Programme. Experience from other countries has shown that the costs of implementing rural electrification are significantly higher than urban connections due to sparsely populated communities and long distances covered by the infrastructure. Therefore it was recommended that the social economic evaluation of Rural Electrification be undertaken to analyse the optimal use of scarce resources. Various mechanisms that could be developed to finance Rural Electrification were also highlighted. 8. During the discussion period a concern was raised about the impact of the proposed tariffs on electricity customers. Regionally countries are not charging cost reflective tariffs thus Lesotho could be an exception to the norm. The consultants pointed out that the best way of protecting consumers in the long run is by charging cost reflective tariffs as this approach leads to efficient services offered by the utility and wider access to electricity services. 9. Participants in the workshop, which was chaired by the Director of Department of Energy, Mr. Batalatsing Kanetsi, included officials from Ministries of Natural Resources, Finance and Development Planning and the Office of the Attorney General. Officers from the Lesotho Highlands Development Authority, the Lesotho Electricity Corporation, the Privatisation Unit, the Advisor to Lesotho Electricity Authority and members of the Steering Committee for the Restructuring of Lesotho Electricity Corporation were also in attendance. |
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Designers