‘LEWA made right call on tar­iff hikes’

Lesotho Times - - Business - Retha­bile Pitso

THE Con­sumer Pro­tec­tion As­so­ci­a­tion (CPA) has lauded the Le­sotho Wa­ter and Elec­tric­ity Author­ity’s (LEWA) for tak­ing con­sul­ta­tive ap­proach and con­sid­er­ing the im­pact their re­cently in­tro­duced tar­iff hikes would have on the econ­omy.

LEWA ap­proved new wa­ter and elec­tric­ity tar­iffs, which came into ef­fect on 1 April 2015. The new tar­iff regime means that do­mes­tic con­sumers who use be­tween 1 000 and 5 000 litres of wa­ter now pay M4.51 from the pre­vi­ous M4.18.

Elec­tric­ity users now fork out M20 for 15.55 units from the pre­vi­ous 16.42 units for the same amount.

How­ever, ac­cord­ing to CPA Sec­re­tariat Nkareng Let­sie, LEWA de­serves credit for hav­ing con­sid­ered the in­ter­ests of all stake­hold­ers be­fore ef­fect­ing the tar­iff hike.

LEWA Chief Ex­ec­u­tive Of­fi­cer Ntoi Ra­papa told the Le­sotho Times’ sis­ter pa­per, Sun­day Ex­press, that the author­ity held four public hear­ings through­out the coun­try as well as var­i­ous an­nounce­ments in the me­dia with the pur­pose of tak­ing on board all the con­se­quences the hikes would have on Ba­sotho.

“LEWA cre­ated a plat­form on which the in­ter­ests of key play­ers, such as con­sumers and sup­pli­ers, were con­sid­ered,” said Mr Let­sie.

“It was an ac­cept­able in­crease bear­ing in mind that the man­u­fac­tur­ing sec­tor needs such es­sen­tial ser­vices to re­main af­ford­able to en­sure busi­ness viability.”

He added that all the coun­tries un­der the Com­mon Mon­e­tary Area (CMA), which con­sists of Le­sotho, Namibia, Swazi­land and South Africa, have re­solved to en­sure in­fla­tion within the coun­tries does not ex­ceed six per­cent.

CMA links South Africa, Le­sotho and Swazi­land into a mon­e­tary union un­der the in­flu­ence of the SA Re­serve Bank. It is also al­lied to the South­ern African Cus­toms Union (SACU) which seeks to main­tain the free in­ter­change of goods be­tween mem­ber coun­tries.

Mr Let­sie said CPA sup­ported LEWA’S de­ci­sion not to im­pose hefty tar­iffs as con­sumers were al­ready reel­ing from the high prices of other goods and ser­vices.

He said the author­ity also took into con­sid­er­a­tion the ef­fect a sharp tar­iff spike would have on Le­sotho’s tex­tile in­dus­try, which is the coun­try’s big­gest em­ployer.

“Tex­tile fac­to­ries rely on wa­ter and elec­tric­ity as their ba­sic in­puts and a high in­cre­ment on the price of the com­modi­ties would dras­ti­cally cur­tail their abil­ity to pro­duce at the same lev­els,” he said.

“The fac­to­ries’ com­pet­i­tive ad­van­tage would have been fur­ther re­duced on the global stage where they com­pete with other coun­tries.

“If they were forced to hike their prices in re­sponse to the in­creased pro­duc­tion costs, their prod­ucts may not be vi­able, lead­ing to even­tual clo­sure.”

Mr Let­sie said Le­sotho’s edge over other coun­tries, in terms of low pro­duc­tion costs, should not be al­lowed to be eroded.

“If the tex­tile firms seize to be com­pet­i­tive due to the price in­creases, it would fur­ther lead to the lay­ing off of many tex­tile fac­tory work­ers who, be­cause of los­ing their jobs, would in turn not af­ford to pay for elec­tric­ity and wa­ter,” he said.

“More­over, tex­tile firms are re­liant on the African Growth and Op­por­tu­nity Act which, if not re­newed on time, will im­pact neg­a­tively on the econ­omy through job losses.”

CPA Sec­re­tariat Nkareng Let­sie

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