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LEWA flags LEC’s poor financial records

Business

Seabata Mahao

The Lesotho Electricity and Water Authority (LEWA) has slammed the power utility company, Lesotho Electricity Company (LEC) over its poor financial record-keeping.

The electricity regulator recently awarded LEC a 9.6 percent power tariff increase across customer categories for the next two years, but raised concerns regarding its ability to properly maintain its books of accounts, which are critical during tariff review.  

LEC had requested between 15 to 23 percent of tariff hike approval for different customer categories from LEWA for the 2024/25 and 2025/26 financial years. 

“The quality of the company’s data keeps deteriorating, and the company does not seem to put enough effort to improve it,” LEWA said in a statement.

It further indicated that LEC does not submit monthly, quarterly, and annual reports in line with set timelines for reporting.

“The company fails to submit quarterly and annual reports requested by the authority.”

LEWA also noted that LEC’s latest financial statements even received an adverse audit opinion for the financial year 2021/22.

The issue of LEC’s financial information has also been raised by SECTION 2, an organisation that advocates for supremacy of the constitution, in its submission on LEC’s tariff review application that has just been finalised by LEWA.

SECTION 2 said LEC must avail most recent audited financial statements of the year ended March 2023, for it to be in a position to provide a thorough analysis of the reasonableness of its tariff application.

“LEC, being wholly owned by the government of Lesotho and registered under the Companies Act, is obligated to prepare accounts under the Act’s provisions. The Act mandates that the board ensures completion of company accounts within three months of the financial year-end, and subsequent auditing within six months thereafter.”

SECTION 2 continued: “Given that LEC’s financial year concludes on March 31, it is reasonable for SECTION 2 to expect that audited financial statements should be available by the end of September each year. Failure to adhere to these statutory requirements undermines the integrity of the financial reporting process and compromises the ability of stakeholders to engage meaningfully in tariff discussions.”

Efforts to get a response from LEC were not successful at the time of going to press.

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