By Peye
How blame game, cabinet meddling paralyze LEC as nation faces darknessTEBOHO KHATEBE MOLEFI and
MOTSAMAI MOKOTJO
MASERU – A damning internal audit and explosive accusations from within the Lesotho Electricity Company (LEC) have laid bare a utility in profound crisis, crippled by alleged mismanagement, failure to meet regulatory obligations and claims of damaging political interference.
At the heart of the turmoil is the LEC’s persistent failure to implement critical directives from the Lesotho Electricity and Water Authority (LEWA), with the company’s leadership pointing fingers squarely at suspended executives and, controversially, the highest levels of government.
The crisis erupted into public view with the leak of LEC’s internal audit report for the third quarter, ending March 2024. Penned by Head of Internal Audit, Thato Matsoso, and submitted to the company’s Risk Committee, the report paints a stark picture of administrative chaos and non-compliance.
A central failing highlighted is the LEC’s chronic inability to submit essential tariff applications to LEWA on time.
“Another application is due December 2025,” Matsoso noted. “However, for the coming already allocated tariff to be allowed, LEC still needs to submit the minimum information that is required by LEWA, which includes the approved budget, strategic plan, and audited financial statements for financial year 2024.”
The report explicitly states the LEC was “not compliant” in all directives management has been given by the LEWA.
In a fiercely candid interview, LEC Stakeholder Relations Manager, Khotso Motšoari, placed the blame for this and other failures directly on the doorstep of the suspended Managing Director, Mohlomi Seitlheko, and his ousted administration.
“One of the main issues required by LEWA for tariff application is for us to submit financial statements. However, we don’t have them,” Motsoari stated bluntly. “That is the reason there are managers who have been suspended. Their failure led to their ultimate suspension.”
He further argued that the suspended executives’ lack of cooperation directly impacted the audit itself, saying “One of the reasons the internal auditor didn’t even know what name the report was is because these people are not giving out required information, thus the disclaimer note.”
This suggests the audit report may have been qualified due to insufficient information provided by the suspended management.The audit report also flagged the LEC’s alarming non-compliance with remitting customer and rural electrification levies to LEWA – a legal requirement under the Lesotho Electricity Authority Act of 2002 (as amended). The staggering sum owed stands at M108 million.
When pressed on this critical failure, Motšoari’s response laid bare the company’s dire financial state: “When you can’t make profits, which funds are you going to give to LEWA?”
He painted a picture of an entity teetering on the brink: “We can’t even buy electricity, the government has been bailing us out… when we are in such debt we can’t even service loans.” This admission confirms the LEC is reliant on taxpayer-funded bailouts simply to procure the power it distributes, while simultaneously defaulting on its statutory obligations to the regulator and struggling to meet loan repayments.
Motšoari directly linked the lack of a maintenance budget, another key concern raised in the internal audit, to these crippling financial constraints. The consequences of deferred maintenance are severe, contributing to unreliable supply and further financial losses.
The financial haemorrhage extends beyond operational shortfalls. Motšoari highlighted catastrophic losses due to vandalism, costing the company M10 million in the last financial year alone.
A single incident in Peka involving damaged equipment required a further M12 million outlay.
“What led to the collapse of the company is also due to the policies that we use,” Motšoari added, suggesting internal policy failures exacerbated vulnerability to such losses.
Adding a layer of technological dysfunction, Motšoari cited the problematic migration to a new SAP software system as a significant factor in the company’s information management crisis.
“When we migrated to a new system… the SAP led to information not being well managed,” he explained. While intended to “increase efficiency and help the development of LEC in an integrated manner,” the transition appears to have backfired, contributing to the very data gaps crippling compliance and audits.
Further deepening concerns over governance and transparency, Motšoari addressed the revelation that LEC failed to report a M32 million fraud case to LEWA.
While not providing specific details on the fraud itself, he contextualized it within the company’s overwhelming expenditure on emergency repairs: “We pay a lot of money to fix our equipment.”
This non-reporting represents a serious breach of regulatory protocol and accountability.
Beyond blaming the suspended executives, Motšoari pointed a finger towards the government itself, alleging damaging interference in the LEC’s financial and administrative autonomy.
While not detailing specific incidents, his comments about reliance on government bailouts and the broader context of the company’s paralysis strongly imply that cabinet-level decisions or pressures have hindered effective management and financial recovery.This allegation resonates with long-standing concerns about political meddling in state-owned enterprises, which often undermines commercial discipline, enables patronage and obstructs necessary reforms demanded by regulators like LEWA. The claim suggests that even with new management, the LEC may struggle to regain stability if political interference persists.
The damning internal audit has revealed widespread non-compliance by LEC with critical regulatory directives, casting a shadow over the utility’s operations and governance amidst accusations of political interference and a contentious court battle over tariffs.
The audit, a stark 27-page report, details numerous failures by the LEC to meet obligations set by the LEWA.
Key deficiencies include:
Chronic reporting delays: Failure to submit mandatory monthly, quarterly, and annual reports to LEWA on time.Poor data quality: Provision of substandard data to the regulator.Specific reporting failures: Neglecting to submit quarterly Bulk Supply Cost tracking accounts, progress reports on Depreciation Fund usage, and the crucial Asset Identification and Evaluation Project Study Report.
Financial management issues: Lack of progress in controlling labour costs within acceptable ratios of total operating costs – a key performance indicator.
Pioneer developer refunds: Failure to refund pioneer developers as mandated by the Electricity Connection Charge Guidelines.Revenue and cash flow measures: Not implementing required strategies to improve financial health.
Audit submission delays: Failure to submit audited financial statements promptly, hindering LEWA’s annual reviews based on actual data.
Compounding these operational failures, the report highlights the disruptive impact of frequent government changes. The audit period saw ministers appointing new LEC boards twice within two years. The LEC’s stakeholder manager pointedly blamed politicians for the utility’s woes, stating that constant board changes directly contributed to the company’s current “mess.”Facing criticism over LEC’s performance and the disparaging third-quarter audit, Acting Energy Minister, Mohlomi Moleko, outlined to Public Eye government measures as the major shareholder.
Minister Moleko stated they have instituted, a Performance Improvement Plan, a Turnaround Strategy, a Long-Term Strategy, a Tariff Review, a Least Cost Electricity Generation Plan and Legal Reforms, including introducing a new Energy Bill.These developments on the backdrop of an Advocates for the Supremacy of the Constitution (SECTION 2) recent litigation over the LEC’s last 9.6 percent tariff increase. SECTION 2 filed a case in the Commercial Court, arguing the increase was improperly granted.
SECTION 2’s core argument centred on flawed documentation: LEC submitted audited financial statements for the year ending March 31, 2022, instead of the required statements for the preceding year ending March 31, 2023. The organization contended that recent audited statements are “pivotal” for justifying any tariff increase, as mandated by LEWA’s own 2012 review procedures requiring cost-of-sales data from the preceding year.
“The accurate determination of the cost of sales necessitates recourse to the audited financial statements for the antecedent year,” SECTION 2 stated in court papers, demanding the tariff decision be reviewed and set aside.
The case before Justice Realeboha Mathaba, was remitted to the High Court of Lesotho on jurisdictional grounds. The respondents included the Minister of Energy, LEWA, the Electricity Authority, the LEC and the Attorney General. Justice Mathaba delivered his ruling on June 13 of this year.
The LEC’s systemic failures place LEWA in an extremely difficult position. Its primary mandate is to regulate the sector, ensure fair tariffs, protect consumer interests and enforce compliance. However, the regulator is now faced with a licensee that is financially insolvent, operationally dysfunctional and failing to meet its most basic obligations – including paying the levies that fund LEWA itself.
LEWA’s ability to enforce its directives is severely compromised when the regulated entity lacks the funds and functional management to comply.
The tariff application impasse is particularly critical.
Without audited financials and a credible strategic plan, LEWA cannot properly assess the LEC’s needs, potentially leading to inappropriate tariffs that either bankrupt the utility further or unfairly burden consumers.
The ultimate victims are the power company’s customers and their businesses. Persistent load shedding, caused by inadequate maintenance, financial constraints affecting power purchases and vandalism, cripples economic activity, disrupts daily life, damages appliances and impacts health and education.
The lack of transparency and accountability in the company erodes public trust.
The government bailouts divert scarce public funds from other essential services like healthcare and education.
The LEC’s internal audit and Motšoari’s stark revelations are not merely an exposé of corporate dysfunction, they are a distress signal from the heart of the country’s essential power infrastructure.
The blame game between current management and suspended executives, coupled with the spectre of cabinet interference, offers little comfort to citizens enduring darkness.
Restoring reliable electricity requires more than finding scapegoats. It demands a fundamental overhaul of governance, a commitment to financial discipline, respect for regulatory authority and the political will to place the nation’s needs above all else.
Until these steps are taken decisively, the country will remain powerless in more ways than one.
The lights remain out, and the path to turning them back on permanently appears long and fraught with challenges.