…I don’t have the funds to import electricity, which poses serious risks to consumers and the economy
Lesotho Electric Company (LEC) is in a serious financial crisis, with its current liabilities exceeding M98.6 million in assets.
As a result, utility companies are unable to purchase electricity for distribution to consumers.
This, according to an external audit report submitted to the Department of Energy in January 2025, revealed that LEC’s cash reserves had fallen M1,458 million.
Bankruptcy poses a serious threat to the country’s power supply projects.
Currently, the company imports all its electricity from Eskom in South Africa and EDM in Mozambique.
This follows the closure of the ‘Muela Hydropower Station, which supplies 72 megawatts of power to the LEC. The station has been undergoing maintenance since October 1, 2024 and is expected to remain offline until the end of this month.
Energy Minister Molomi Moreko told the media this week that the financial difficulties at the LEC were attributed to total financial failure, failure to governance and low energy tariffs.
He revealed that the LEC is currently dependent on government relief. The government has recently injected M300 million to allow the company to continue purchasing electricity.
“The external audit report contains reliable evidence revealing severe governance failures, fraudulent financial practices, and operational inefficiencies that have put both the company and the country’s power source at stake,” Moreco said.
He further noted that the LEC failed to prepare the correct financial statements when the auditor audited.
The external audit report highlighted that LEC failed to comply with International Financial Reporting Standards (IFRS), making it a major factor in auditors issuing disclaimer opinions for unconfirmed financial accounts.
It also revealed that LEC failed to comply with corporate policies and corporate governance frameworks, including the King IV Code on Corporate Governance. The report further flagged LEC’s reliance on manual financial journal entries without supporting documents, creating a high risk of fraudulent transactions.
Moleko pointed out that the financial difficulties at LEC were exacerbated by practices that bought electricity from Eskom and EDM at high prices and sold at low prices to consumers, resulting in huge losses. He said the LEC has been struggling financially for more than a decade and will be cost-effective in seeking emergency revisions to electricity bills.
To address these challenges, Moreco said the Department of Energy will review the energy bill and will be presented to Congress soon. The bill proposes increased tariffs to make them sustainable, addressing the conditions of electricity subsidies, and ensuring that only vulnerable groups will receive assistance.
He said the economic hardships of the LEC have reached an important point where the company can no longer afford to buy electricity and can no longer cover its operating costs.
“The root cause remains high power costs from Eskom and EDM, which are lost and sold to consumers. There is an urgent need to revise energy tariffs to become more closely aligned with the people of South Africa,” he said.
Additionally, he accused inefficiency in service delivery, inadequate response to technical failures, and the inability to maintain critical infrastructure, increasing the risk of system failures and network collapse.
Moreco also addressed allegations of unfair labor practices within the LEC, including illegal dismissal, long-term disciplinary hearings and support for employment.
He claimed that the company was “captured” by politicians, ensuring that the government was making tireless efforts to restore proper control.
He said the LEC committee has suspended the entire LEC executive for three months to open a way for investigation.
The suspensions include LEC Managing Director Mohlomi Seitlheko, corporate sector Khotso Nthontho, corporate sector head, Moipone Mashale head of corporate services Sakhele Mapetja, head of information technology head, Makabelo Mohaso’s customer experience experience experience experience experience Ntepe, internal auditor at Thato Matsoso and head of Operations Serolo Tikoe.
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The LEC board chair of NTSIE MAPHATHE, who serves as MD, told the media that actions will be taken against individuals who commit fraud and financial dismantling. He shows that penalties vary depending on the severity of each case, and the Legal Department advises on appropriate measures.
However, LEC was unable to disclose the electricity they currently purchase from Eskom and EDM, the associated costs, or the selling price to consumers.
Tšepang Ledia, the LEC’s public relations manager, said anyone with related information is suspended. He introduced the inquiry to Advocate Makhetha Motšoari, Stakeholder Relations Manager at LEC.
