Lesotho Electricity Authority Annual Report 2012/13 LEA... · Francina Moloi Chairperson ‘Mampho...

Annual ReportLesotho Electricity Authority

2012/13

CONTENTS

Board of Directors 2

Chairperson’s Report 3

Chief Executive’s Statement 6

DEPARTMENTAL REPORT

1 TechnicalRegulation-Electricity 09 2 TechnicalRegulation-Water 11 3 EconomicRegulation 13 4 LegalServices 18 5 CustomerAffairs 20 6 Finance,HumanResourcesandAdministration 22 7 CooperationwithRegionalandInternationalBodies 24

ELECTRICITY SECTOR DEVELOPMENTS

1 ElectricitySectorDevelopments 26

FINANCIAL STATEMENTS

1 FinancialStatements 30

© Lesotho Electricity Authority 2013

Lesotho Electricity Authority, 6 Floor, Moposo House, Kingsway, Maseru, Lesotho

Tel: +266 22 312479 Fax: +266 22 315094

Email: [email protected] Website: wwww.lea.org.ls

ANNUAL REPORT - 2012/13 1

ANNUAL REPORT Lesotho Electricity Authority

CHAIRPERSON’S REPORT

OnbehalfoftheLesothoElectricityAuthority’s(LEA)Board,itiswithadeepestsenseofgratificationthatIpresenttheAuthority’s2012/13AnnualReportwhichcontainsthehighlightsoftheactivitiesandachievementsoftheAuthorityduringthereportingperiod.TheReportisinclusiveofauditedFinancialStatementsforthesameperiod.Itmaybepropertoindicatethat, lookingatthedevelopmentsin

theurbanwaterandsewerageservicesregulatorylandscape,thisreportcouldbethelastoneissuedbyLEAinitscurrentconstitutionandmandate.TheGovernmenthastakenadecisiontotransformtheAuthorityintoamulti-sectorregulatorassumingadditionalpowerstoregulatetheurbanwaterandsewerageservicessub-sector.TheactivitiesleadingtotherealisationofthesaidgoalarewelldocumentedintheReport.

InordertoachievetheobjectivesofregulationasenvisagedundertheLesothoElectricityAuthorityAct,2002asamended,severalkeyactivitiesoftheBoardwerecarriedout.Ofthose,Iwishtomentionthedeterminationofthe2012/13electricityprices.LEAreceivedatariffapplicationfromtheLesothoElectricityCompany(LEC)foranaveragetariffincreaseof25%onenergychargesand27%onmaximumdemandchargeswitharevenuerequirementofM550million.FollowingapublicconsultationprocessandLEA’sanalysisof theapplication,theBoard resolved that theapproved revenue requirement for LEC, including customerandelectrificationlevies,wouldberealisedfromend-usertariffincreasesof6.9%forlargecustomers,7.4%forstreetlighting,and6.9% for domestic andgeneral purposeon energy chargesand9.7%onmaximumdemandchargesforlargeusers.Thecustomerlevywasincreasedby8%fromM0.0213/kWhtoM0.0230/kWhwhiletheelectrificationlevywasnotchanged.

ItwillberecalledthattheAuthorityhasestablishedaUniversalAccessFund(UAF)toassisttheGovernmentin itselectrification initiatives.TheBoardapprovedM8,700,000.00,asa totalUAFbudget for2012/13.RegardingimplementationoftheUAF-fundedelectrificationprojects,theHaRafolatsaneelectrificationscheme(inMokhotlongdistrict)wastheonlyprojectthatwascompletedalthoughtheworktoelectrifytheareahadcommencedinthefinancialyear2011/12.

1

Lesotho Electricity Authority ANNUAL REPORT ANNUAL REPORT Lesotho Electricity Authority

BOARD MEMEBERS - 2012/132 CHAIRPERSON’S STATEMEMENT - 2012/13 3

Francina Moloi (Professor)Chairperson

Disclosure of InterestThe Authority is a Government regulatory agency with no shareholding. The Members do not hold any financial interest in the Authority.

‘Mampiti MateteBoard Member

Francina MoloiChairperson

‘Mampho Kotelo-’Molaoa Board Member

Karabo MohauBoard Member

Leboli ThamaeBoard Member

‘Maboiketlo MalieheBoard Member

Retselisitsoe MotlojoaBoard Member

Ntoi RapapaChief Executive

Auditor’s AppointmentIn terms of the LEA Act, the Auditor General is the Auditor of the Authority.


CHAIRPERSON’S STATEMEMENT - 2012/134 CHAIRPERSON’S STATEMEMENT - 2012/13 5

Furthermore,theLEABoardapprovedtheDepartmentofEnergy’s(DoE)applicationforextensionoflicenceexemption for the Electricity AccessPilot Projects (EAPPs) fromOctober2012 to September2014. It isanticipated that theDoEwould, inmotivating for furtherextensionorotherwise,provide theAuthoritywithlessonslearntfromthepilotprojectssothatappropriatemechanismscanbeputinplacetoincreaseaccesstoelectricity.

TheBoardisawareofthehugeimplicationsofprudenceinfinancialmanagementatatimewhenthecountryisonacampaigntofightthescourgeoffinancialmismanagementinitsvariousforms.Inthisregard,thenotionoftransparencycontinuedtobethebasisofregulationoftheelectricitysector.ThisrealityisevidencedbytheattachedFinancialStatementsforthereportingyear.

AnotherareathatIwishtoreflectonistheresolutionofcomplaintsbetweenlicenseesandcustomers.TherewasasteadyimprovementwithregardtoLEA’scomplaintsresolutionmechanismsinthattherelativenumberofunresolvedcaseshasbeenreduced.InarelateddevelopmentgearedtowardsenhancingLEA’sreadinessforassumptionofurbanwaterandsewerageservicesregulation,theLesothoElectricityandWaterAuthority(ResolutionofComplaintsforWaterServices)Rules2013werefinalisedandpendingpublication.TheRulesaretobeappliedinresolvingcomplaintsthatpertaintotheurbanwaterandsewerageservices.TheAuthorityalso finalised other regulatory instruments for the anticipated urbanwater supply and sewerage servicesregulation. Inthisreport,detailedinformationregardingtheapplicationandbenefitsoftheseinstrumentsisprovided.

The issue of fairness of connection charges to electricity customerswas considered by theBoard. In thisregard, the Lesotho Electricity Authority (LEA) Electricity ConnectionChargesGuidelineswere approved bytheAuthorityandbecameoperationalfrom01September,2012.ThepurposeoftheGuidelinesisamongstothers, toguideLEConstepstotake in formulating fairandtransparentchargeswithregardtoelectricityconnections.

TheAuthority’svision istobecomeaworldclassregulator.LEAcommits itselftobearegulatorybodythatupholds,amongstothers,thevaluesoftransparencyandprofessionalism.ThiswasrealisedwhentheAuthorityextensivelyinvolvedtheWaterandSewerageCompany(Pty)Ltd(WASCo),thewaterutility,indevelopingtheregulatoryinstrumentsforthewatersector.

It would be a remiss not to acknowledge that the regulated entities (Licensees) displayed a movementtowardsembracingregulationoftheelectricitysector.Thisdevelopmentwashighlyappreciatedasnoticeableimprovementsweremadeonmatterspertaining toservicedeliverybyLicensees.Nevertheless, theBoardnotedthattheLicensees,especiallyLEC,werenotreportingasrequiredunderthelawandsubsidiarylegislation.Inthisregard,itisimperativethat,duringthenextfinancialyear,theyshouldenhancetheirreportingtotheAuthoritysothatthelattermaydischargeitsresponsibilitiestothefullest.

The contribution that the non-governmental organisations, academia, industries, consumer associations,commercialsector,electricitycustomersandotherstakeholdersmadeduringregulatoryprocessessuchaselectricity tariffs reviewsundertakenbyLEAhasnotgoneunnoticed.TheAuthority indeedappreciates theactiveparticipationandinvolvementofthecivilsocietyintheregulatoryprocesses.Theintentionistoescalatetheuseofconsultativeprocessestoahigherlevelforincreasedinclusivenessandstakeholderbenefit.

Throughout the year,Membersof theBoard indicated their unwavering commitment anddedicationwhileexecutingtheirfiduciarydutiesfortheAuthority.ThishasbeenequallythecasewiththeAuthority’semployees.BoththeBoardandtheAuthority’sstaffareappreciatedandhighlycommendedfordemonstratingahighlevelofmaturity,professionalismandadherencetogoodcorporategovernanceintheexecutionoftheirduties.

I would also like to thank our cooperating partners, namely, the United States Agency for InternationalDevelopment(USAID)andtheWorldBankfortheirassistance.TheUSAIDprovidedfinancingforthepowerplanningtrainingcourseorganisedfortheelectricitysupplyindustry’s(ESI)stakeholdersthatincludedamongstothers,LEA,DoEandLEC.TheWorldBankhasbeeninstrumentalinassistingtheAuthoritywiththedevelopmentoftheregulatoryinstrumentsforurbanwatersupplyandsewerageservicesincludingpartoftheAuthority’sstaffcosts.

WithoutthesupportoftheGovernment,theAuthoritywouldnothaveachieveditsobjectivesduringtheyear.This support ismorecommendablewhenone realises thatwhen thenewGovernmentassumedpower in2012,itdisplayedandconstantlysustainedgreatenthusiasmtoconsultroleplayersonallaspectspertainingtotheelectricityservicesprovisioninthecountry.OurspecialtributegoestotheHonourableMinisterofEnergyMeteorologyandWaterAffairs(MEMWA),Dr.TimothyThahaneforhisexceptionalleadership,guidanceandcontinuedsupporttotheAuthority.

Inconclusion,IwishtoassureeveryLEAstakeholderthatwetakethemandateoftheAuthorityseriouslyandpledgetocontinueservingboththecountryandtheelectricitysectorwithhonourmotivatedbyourperennial

professionalismq

FrancinaLMoloi(Prof.)Chairperson

The Minister of Energy, Meteorology and Water Affairs Dr. Thimothy Thahane (left) interacts with some of the LEA and WASCO Board Members during the Minister’s end of year function in December, 2012.


CHIEF EXECUTIVE’S STATEMENT

Itiswithsincerepleasurethat Ireport,onbehalfoftheManagementandStaffoftheLesothoElectricityAuthority(LEA),theactivitiesthattheAuthoritycarriedoutduringtheperiodApril2012toMarch2013.Theyear2012/13istheninthsincetheAuthoritystarteditsoperations.Inthemain,thereportfocusesontheoperationalactivitiesthatwereundertakeninaccordancewiththecorrespondingyear’sBusiness

Plan.TheBusinessPlanwasinformedbythefive-year2009/10to2013/14LEAStrategicPlan.TheStrategicPlanprovidestheoverallvisionoftheAuthorityduringthefiveyearperiod.Insummary,theStrategicPlanfocusareaswereasfollows:a)theInternalProcesses;b)PublicAwareness,EducationandBranding;c)Advocacy;d)FacilitatingUniversalAccess;e)EnsuringtheSecurityofSupplyandf)HumanResourcesManagementandDevelopment.

TheinternalprocessesoftheAuthorityhavetobecontinuallyimprovedandrefinedsoastoattainimprovedservice delivery targets, and tomeet the ever changing demands of regulation. Activities under this areaincludedthedevelopmentofthelicensingandregulatoryframeworkforurbanwaterandsewerageservices,andimprovementinservicedeliveryprocessesandsystemswithintheAuthority.TheAuthority,withassistancefromtheWorldBankfunding,developedurbanwaterandsewerageservicesregulatory instruments.Thesewere theComposite License, UrbanWaterQuality of Service and Supply Standards (QoSSS),WastewaterTreatmentFacilitiesSafetyStandards,andsubsidiarylegislation.Thedocumentswereextensivelydiscussedinconsultativeworkshopswithstakeholders,particularlyWASCO.Asaresult,WASCOistentativelyscheduledtoberegulatedin2013/14.

Another key area that is indicative of the improvement in LEA’s service delivery is resolution of customercomplaintslodgedagainstelectricityservicesproviderswhentheyareescalatedtotheAuthority.

ItshouldbehighlightedthattheAuthorityaimstoensurethatcomplaintsbroughttoitareexpeditiouslyandamicablyresolved.Ishouldthereforetakethisopportunitytoemphasisethat,inthecaseofacomplaintarising

2Ntoi Rapapa (Associate Professor)Chief Executive

CHIEF EXECUTIVE’S STATEMENT - 2012/136

betweenacustomerandalicensee,thecustomershouldfirstexhaustallpossiblemeasureswithinthelicenseebeforeapproachingtheAuthorityforresolution.

Inlinewiththefocusareaofpublicawareness,educationandbranding,several initiativesweresuccessfullyundertaken.FollowingtheestablishmentofworkingrelationshipswithLEAstakeholdersinthetendistrictsofthecountryin2011/12,theAuthorityhadface-to-faceinteractionswiththestakeholdersandpublic.TheaimwastoraiseandmaintaincountrywidepublicawarenessonLEA’smandateandpromoteaccesstoregulatoryinformation.TheAuthoritysupplementedtheseeffortswiththeuseofchannelssuchasregularradioprograms,televisionpresentationsandpublicationofadvertorials inthenewspapers.Aspartofenhancinginformationdisseminationon theregulationofelectricityandurbanwaterandsewerageservices, theAuthorityheldaworkshopforthemediatoappraisethelatterontheroleoftheAuthorityintheregulationofelectricityandurbanwaterandsewerageservices.

As a socially responsible institution, LEA carried out Corporate Social Responsibility (CSR) activities at theJuvenileTrainingCentre(JTC),LerotholiPolytechnic(LP)andNationalUniversityofLesotho(NUL).Regardingadvocacy LEA participated in the regular Ministry of Energy, Meteorology and Water Affairs (MEMWA)activities,suchasHeadsoftheMinistry’sDepartmentsandofParastatalsmeetingschairedbytheHonourableMinister. Amongst others, the Ministerial meetings discussed matters pertaining to the enhancement ofMEMWA’sservicedelivery objectives.Moreover, theAuthorityheldworkshops for theESI stakeholdersonPowerQualityandTransmissionGridCodedevelopment.LEAandtheUnitedNationsEconomicCommissionforAfrica(UNECA)heldahighlevelworkshoptoprovideplatformfordiscussionondeploymentofPublic-PrivatePartnerships(PPPs)inrenewableenergy(RE)inLesothowhichwasattendedbymajorlocalandinternationalstakeholders.

Further afield, the Authority participated in meetings and training workshops organised by the RegionalElectricityRegulatorsAssociationofSouthernAfrica’s (RERA)and theAfricanForum forUtilityRegulators(AFUR).Thenewtrendamongstregionalregulatorsisthatmosthavebeentransformedfromelectricitysectortomulti-sectorregulators.AsanewmemberofEasternandSouthernAfricaWaterandSanitationRegulatorsAssociation(ESAWAS),theAuthorityparticipatedforthefirsttimeasafullmemberintheAssociation’sAnnualGeneralMeeting(AGM)andConferenceinKigali,Rwanda.Inarelateddevelopment,theAuthorityhasbeenrequestedtohostESAWAS’s7thAnnualGeneralMeetingandConferenceinOctober2013.

The issueofsecurityofsupply in thecountrycontinuedtobeanotherpriorityarea forLEA. Inaneffort topartakeinsectorwideeffortsinensuringsecuringofsupply,theAuthorityparticipatedinMinisterialactivitiestodetermineelectricitygenerationoptions.TothiseffectmeetingsonKobongpumpedstorageinitiativeandbi-lateralmeetingsbetweentheDepartmentsofEnergyofLesothoandSouthAfricaonenergycooperationmatterswereattended.Inordertoensurethatlocalstakeholderswereawareoftheimportanceoftheissuesonsecurityofsupply, the first twoof threemodules foracustomisedpowerplanningtrainingcoursewereheldforElectricitySupplyIndustry(ESI)stakeholders.Thelastonewouldbeheldin2013/14.ThepurposeofthecoursewastocapacitateMEMWA,LEA,LEC,LesothoHighlandsDevelopmentAuthority(LHDA)andtheprivatesectoronkeyissuesofpowerplanningforthecountry.

Thefacilitationoftheattainmentofuniversalaccessobjectivewasundertaken.InthisregardtheLEAElectricityConnection Charges Guidelines were finalised and duly approved. Amongst others, the Guidelines aim atensuringthatelectricitylicensees,clearlyandtransparently,definethebasisonwhichconnectionchargeswillbecalculatedandthatthereisno‘free-riding’.Allcustomershavetomakeafaircontributiontothecostofupstreamnetworksandanycross-subsidymustbeclearlyreflected.

InApril2012,theAuthorityextendedPerformanceManagementSystem(PMS)toallstaffmembers.Initially,

CHIEF EXECUTIVE’S STATEMENT - 2012/13 7


Transmission Grid Code

FollowingthedraftingandpreparationoftheGridCodedocument,anditssubmissiontoLesothoElectricityCompany (LEC) in2011/12, theGridCodeReviewPanelheldstakeholderworkshops todiscuss thedraftdocument. Subsequently, thePanelmet to consider commentsmadeduring the stakeholders’workshops.Itwasenvisaged that theconclusionof theGridCodewouldberealised in the following financial yearasasteptowardsthefinalisationoftheSupplyRules.TheTransmissionGridCodeismeanttoprovideclearandtransparentrequirementsfornon-discriminateaccesstotransmissioninfrastructure.

Finalisation of Electricity Regulatory and Licensing Framework

With the aim of ensuring that the grading and categorisation of electrical contractors and installerswasregulatedsoastoensuretransparency,LEAmetwithkeystakeholderssuchastheMinistryofWorks,LECandelectricalcontractorstofinalisetheprocessofdevelopingpertinentrules.AsoftheendofMarch2013,theAuthorityhadpreparedtheRulesforstakeholders’consideration.Abriefonthebackground,legalbasis,andobjectivesoftheRulesandanexecutivesummaryoftheRuleshadbeenpreparedforMinisterialbriefing.

Monitoring Licensees’ Compliance and Performance

Technicalauditsoflicensee’systemshadbeencarriedoutandpowerqualityreportshadbeenpreparedandanalysedfollowingregularpowerqualityinvestigations.Theanalysesshowedthatthepowerqualitywaswithinacceptablelimitsatall investigatedsites.InspectionofalltheLECtransmissionsubstationswasundertakenandareportwithrecommendationswaspreparedandsubmittedtoLECtoaddressissuesthatwereidentifiedtobeposing risk toLicensee’s staff, thegeneral public, theequipment itself, andcouldaffect securityandreliability of supply. The conclusion drawn from the inspectionswas that the general condition of some ofLEC’stransmissionsubstationswasnotsafetothepublicandtheCompany’spersonnel.TheAuthoritythusrecommendedthatLECshouldprepareadetailedsubstationPlannedPreventiveMaintenance(PPM)schedulewithintwo(2)monthsandprovidetheAuthoritywiththecopyofthesamesothatthelatter’sowninspectionteamcouldworkindependentlytoascertainwhetherthePPMschedulewasindeedbeingimplemented.

CHIEF EXECUTIVE’S STATEMENT - 2012/138 TECHNICAL REGULATION - ELECTRICITY - 2012/13 9

thePMShadbeenusedtoassessLEAManagementbasedontheirindividualresponsibilitiesandtimelinesasentailedintheBusinessPlan.

TheissueofrisksthatcouldjeopardisetheAuthority’sabilitytodeliveronitsmandatewasalsoplacedhighontheagenda.Asaresult, riskmitigationmeasureswerebeingconsideredandLEAstartedprocessesofdevelopingariskpolicyandstrategydocumentinthisregard.

Turningattentiontochallengesandwayforward, itmaybementionedthatanewStrategicPlanneedstobedevelopedandtheCorporateGovernanceHandbook (CGHB)hastobereviewedtoenabletheAuthoritytodeliveron itsmandatebeyond2014. In2013/14theAuthoritywillassumeurbanwaterandsewerageservicesregulationmandate.TheAuthoritywillaimto,amongstotherthings, finaliseand issuea licencetoWASCO,studytheutility’spricingmechanismsoastoeventuallyreviewthecompany’stariffs’structureandlevelsupon the latter’s future tariff reviewapplicationsubmissions.Reportingmechanisms forWASCOwillhavetobedeveloped.Issuesofaccesstowaterandsewerageservicesandawarenessonurbanwaterandsewerage services will be prioritised.Measures will be undertaken to expand the cooperation frameworkbetweentheAuthorityandotherCompetentAuthorities.

On theelectricityside, theAuthoritywill seek todevelopguidelines forPowerPurchaseAgreements (PPA)andIndependentPowerProducers(IPPs). IPPframeworkswouldbeveryuseful inpromotingprivatesectorparticipationinelectricitygenerationbusinessandcontributetoenhancedsecurityofelectricitysupplyinthecountry.Termsofreferencefortheassignmenthavebeendevelopedandsubmittedtoapotentialfinancier.ItispleasingtoinformourstakeholdersthatsimilartopreviousyearssincetheestablishmentoftheAuthority,our financial statements have been issued unqualifiedwhich is themark of theAuthority’s sound financialmanagement.

Onceagain,onbehalfoftheManagementandStaffoftheAuthority,IwouldliketoexpressmydeepgratitudeandappreciationtoallLEAstakeholders,especiallyGovernment,LicenseesandCustomersfortheirenduringgoodwillandsupporttoLEA’sendeavours,thusprovidingveryvaluableinputsintotheregulatoryprocesses.Thecontinuingprovisionofexcellentandvisionary leadershipbytheBoardofDirectorsofLEAisalsohighlycommendable.IwishalsotothankLEAManagementandsupportStafffortheirdedicationanddiligenceinperformingtheirduties.Lastbutnotleast,LEAaimstoserveallstakeholdersconsistentlywithaccountability,

professionalism,transparencyandteamworkq

N.Rapapa(Assoc.Prof.)CHIEFEXECUTIVE

Technical Regulation Electricity 3


TECHNICAL REGULATION - WATER - 2012/13 11TECHNICAL REGULATION - ELECTRICITY - 2012/1310

InspectionsoftheLECnetworkhaveshownthatinsomeareasthegrowthoftreesthreatenselectricitysupply.AttheendofthereportingperiodLEChadnotsubmittedthemaintenancescheduletotheAuthority.InspectionsonpartsoftheLECdistributionnetworkhadbeencarriedoutandreportsonthefindingswerebeingprepared.Inspectionswerealsoundertakenoncustomers’premisesinresponsetocustomercomplaints.

Collection of ESI Data

TheAuthorityhadcontinuedtoexploreexternal fundingsources foracountrywidesurveyontheElectricitySupplyIndustry(ESI)data.DatafromtheLicenseessuchasthatonmaximumdemandandconnectionshadbeenreceivedandanalysed.

Mini-Grids Frameworks Development

TheAuthorityasamemberoftheRegionalElectricityRegulatorsAssociationofSouthernAfrica(RERA)wasinvolvedinthedevelopmentofRegulatoryFrameworksforMiniGrids,employingtheRenewableEnergiesfortheSouthernAfricanDevelopmentCommunity (SADC)region.The initiative isanendeavourtoenhance

electricityaccesstotheruralpartsoftheregionq

The growth of trees in some areas threatens electricity supply.

Regulation of Urban Water and Sewerage Services

Inanticipationof theassumptionofurbanwaterandsewerageservicesregulation in2013/14,somekeyoperationaldocumentswerebeingfinalised.Inthereportingperiodthefollowinginstrumentsweredeveloped:

1.UrbanWaterQualityofServiceandSupplyStandards(QoSSS)

TheQoSSSdocumentaddressesbothserviceandsupplyqualityaspects.Withregardtoqualityofservice,thedocumentamongstotherthings,addressesissuessuchastimeframesforWASCOtoprovidecustomerservices requests including quotations and supply, faults’ handling, water account queries and customercomplaints handling. The standards provide detailed measures that WASCO has to take to ensure thatcustomersgetquality service.Thequalityof supply standardsset theparametersof thequalityofpotablewaterthattheutilitymustadhereto.

2.WaterandSewageTreatmentFacilitiesSafetyStandards

Thestandardsare tobeapplied to theoperationandmaintenanceofallwaterandwastewater treatmentfacilitiesoperatedbythelicensee.Thelicenseeshouldadaptthesestandardstotheoperationofanyparticularfacilitieswherever it isnecessary. Theobjectivesof thesafetystandardsare toavertaccidentsonurbanwaterandwastewatertreatmentplants,tomitigatehealthriskstoworkersandtoensuretheprotectionoftheenvironment.

Consultative Processes on Development of Water Regulation Instruments

Duringtheyear,theAuthorityheldseveralconsultativemeetingswithkeystakeholders;namely,GovernmentDepartments,WASCO,NGOs,industriesandbusinessrepresentatives,themediaandothers,todiscussthemodalitiesofurbanwaterandsewerageservicesregulationandpresentationsofthepertinentdocumentswasmade.Theimplementationoftheregulatoryinstrumentsrequirescontinuousdevelopmentandstrengtheningofapplicableskillswithrespecttowaterregulation.Inthisregard,theWorldBankandtheGovernmenthavecommittedtoassistingLEWAwithcontinuedcapacitybuildinggearedtowardsimplementationoftheregulatory

instrumentsandannualperformanceassessmentofWASCOq

Technical Regulation Water 4


ECONOMIC REGULATION - 2012/13 13TECHNICAL REGULATION - WATER - 2012/1312

One of the final workshops wherein the Authority and WASCO discussed issues pertaining to regulation of urban water and sewerage services.

Electricity Prices for 2012/13

TheLesothoElectricityAuthority(LEA)receivedatariffreviewapplicationfromtheLesothoElectricityCompany(LEC)requestinganannualpriceincreaseof25%onenergychargesand27%onmaximumdemandchargesfor the 2012/13 financial year. LEC requested to be allowed a revenue requirement ofM547.6million.AfterLEAhadsoughtclarificationsontheapplication,LECmodifiedtheapplicationaccordingly.Intherevisedapplication,LEC’srevenuerequirementwasM550million.

Apublicnoticewasissuedforstakeholderstomakecommentsandinputsasrequiredbythelaw.CommentswerereceivedfromConsumerProtectionAssociation(CPA),LargeIndustrialCustomers(HuminJeanswear(Pty) Ltd and CGM Group), Forum of Electrical Practitioners Industry (FEPI), Queen ‘MamohatoMemorialHospital, Lesotho Textile ExportersAssociation (LTEA), BakersAssociation of Lesotho (BAL) andDomesticCustomers.ApublicconsultationsessionwasheldwhererepresentativesofFORMOSA,FEPI,LesothoChamberofCommerceandIndustry(LCCI)andCPAmadepresentations.

Subsequently,theLEABoardapprovedLEC’srevenuerequirementofM473.7millionfor2012/13resultingintheapprovedtariffsreflectedinthetables1and2below.Thetariffsexcludeda5%ValueAddedTax(VAT).

Economic Regulation Department 5


ECONOMIC REGULATION - 2012/1314 ECONOMIC REGULATION - 2012/13 15

1. The National Energy Regulator of South Africa (NERSA) had already indicated in June 2008, when it approved Eskom’s tariffs for 2008/09, that subsequent tariff increases would be between 20% and 25% annually.

Customer Categories

Industrial. HV

Industrial. LV

Commercial. HV

Commercial. LV

Old Maximum Demand Charges (M/kVA)

150.0586

175.2732

150.0586

175.2732

Approved Percentage Change

9.7%

9.7%

9.7%

9.7%

Table 2: Approved LEC Maximum Demand (MD) Maximum Demand for 2012/13 by the LEA Board

Approved Maximum Demand Charges

(M/kVA)

164.61428

192.27470

164.61428

192.27470The figures in the two tables above exclude 5% VAT.

Customer

Categories

Industrial HV

Industrial LV

Commercial HV

Commercial LV

General Purpose

Domestic

Street Lighting

Approved

Energy

Charges

(M/kWh)

0.1169

0.1294

0.1169

0.1294

0.9555

0.8453

0.4799

Old

Energy

Charges

(MkWh)

0.1083

0.1199

0.1083

0.1199

0.8855

0.7834

0.4448

Adding

Customer

Levy @

M0.0213/kWh1

0.1399

0.1524

0.1399

0.1524

0.9785

0.8683

0.5029

Adding Rural Electrification

Levy @M0.02/kWh for large

customers and @M0.035/

kWh for others (M/kWh)2

0.1599

0.1724

0.1599

0.1724

1.0135

0.9033

0.5379

Final Approved

Energy Charges

including levies

(M/kWh)

0.1599

0.1724

0.1599

0.1724

1.0135

0.9033

0.5379

Table 1: Approved LEC Energy Charges for 2012/13 by the LEA Board

Old Energy

Charges

including

levies (M/

kWh)

0.1496

0.1612

0.1496

0.1612

0.9418

0.8397

0.5011

Final Tariff

Percentage

increases

6.9%

6.9%

6.9%

6.9%

7.6%

7.6%

7.4%

Figures1and2belowillustratetheannualelectricitytariffincreasesfrom2007/08to2012/13.

1ThecustomerlevyisapprovedbytheMinisteroftheMinistryofEnergy,MetereologyandWaterAffairs(MEMWA).2TheruralelectrificationlevyismeanttoincreaseaccesstoelectricityandisalsoapprovedbytheMinister-MEMWA

Figure1above, illustratesthat from2007/08to2012/13energytariffs increasedfromM0.0740/kWhtoM0.1599/kWh for industrial and commercialHV and fromM0.0819/kWh toM0.1724/kWh for industrialandcommercial LVcustomers, respectively.General purposeenergy tariff increased fromM0.6800/kWh toM1.0135/kWh in six years while energy tariffs for domestic customers increased fromM0.4900/kWh toM0.9033/kWhduringthesameperiod.Onaverage,domestic,industrialandcommercial,andgeneralpurposecustomers’energytariffsincreasedby5.2%,12.2%and1.2%,respectivelyaboveaverageinflationrateduringtheperiod2007/08to2012/13.EnergytariffsforstreetlightingincreasedfromM0.2690/kWhtoM0.5379/kWhand,onaverage,thisconstitutesabove10%increaseinrealtermsfortheperiodofsixyears.

2007 / 2008 2008 / 2009 2009 / 2010 2010 / 2011 2011 / 202

Industrial HV

Industrial LV

Commercial HV

Commercial LV

Mal

oti/k

Vh

200.0000

180.0000

160.0000

140.0000

120.0000

100.0000

80.0000

60.0000

40.0000

20.0000

0.0000

Figure 2 Annual Maximum Demand Charges

Years

2012 / 2013

Figure 1 Annual Energy Charges

0.8000

0.6000

0.4000

0.2000

0.0000

Mal

oti/k

Wh

1.0000

Customer Categories

Indus

trial H

V

Indus

trial L

V

Comm

ercia

l HV

Comm

ercia

l LV

Gene

ral P

urpo

se

Dome

stic

Stre

et Lig

hting

2007 / 2008

2008 / 2009

2009 / 2010

2010 / 2011

2011 / 2012

2012 / 2013


ECONOMIC REGULATION - 2012/13 17ECONOMIC REGULATION - 2012/1316

Figure2aboveillustratesthatmaximumdemandchargesforlargecustomersincreasedfromM123.3180/kVA to M164.6143/kVA for HV and from M123.9690/kVA to M192.2747/kVA for LV customers,respectively.Onaverage,highvoltagecustomers’maximumdemandchargesincreasewasslightlybelowtheaverageinflationratewhilelowvoltagewas1.2%aboveinflationfortheperiod200708to2012/13.

Theincreaseshavemainlybeenduetoincreasedbulksupply,operatingandmaintenancecostsforLEC.

A representative of the Lesotho Chamber of Commerce and Industry (LCCI) Mr. Steven Monyamane makes a presentation before LEA Board, LEC and the Public during the 2012/13 electricity prices consultations at Lehakoe Recreational club.

Regulatory Documents

TheAuthoritydevelopedandapprovedthefollowingguidelinesandprinciples,whichbecameeffectivefrom01September2012:

(a)LesothoElectricityandWater(LEWA)ChargingPrinciplesforElectricityandWaterandSewerage

TheChargingPrinciplesprovidethebasisforallowedrevenueandhowfixedassets(dependingonhowtheyhavebeenfinanced)aretobetreatedbytheAuthority intariffreviews.ThePrinciplesalsooblige licenseesto justify the reasonablenessofcostsandprovideguidanceonhowreasonablenessofcosts incalculatingrequiredrevenuecanbereviewed.ThePrinciplesprovidehowfixedassetsshouldbetreatedintariffreviewandtheapplicablerateofreturn.TheLicenseesarefurtherguidedonhowtheyshoulddealwithforecastsandout-turnadjustmentsandauditeddataintariffsubmission.Finally,thelicenseesareprovidedwithguidanceinthe

designoftariffs,inthattariffs,totheextentpossible,reflectcostsofprovidingserviceandshallnotdiscriminatebylocationofusersorgenerators.

(b)LesothoElectricityAuthority(LEA)ElectricityConnectionChargesGuidelines

TheAuthoritydevelopedandapprovedElectricityandConnectionChargesGuidelines.ThemainobjectivesoftheGuidelinesareto:-

1. Set a standard methodology for determining connection charges for transmission and distributioncustomersinthecountry;

2. Describethetechnicalrequirementsandarrangementsfortheconnection;and

3. Provideagovernancestructuretodealwithfuturedevelopments.This includesaresolutionprocesstodealwithdisputesrelatingtoconnectionarrangementsandcharges.

The Electricity Connection Charges Guidelines are meant to ensure that electricity licensees, clearly andtransparently,definethebasisonwhichconnectionchargesarecalculatedandthatthereisno‘free-riding’andthatallcustomersmakeafaircontributiontothecostofupstreamnetworkandanycross-subsidyisclearlyreflected.

Finally, the Connection Guidelines require the electricity licensees to design connection charges based on‘shallow’ approach’ as opposed to ‘deep approach’. Under the shallow approach, the customers are onlyrequiredtopaydedicatedcostsofconnectionswhile inthe later,thecustomersarerequiredtopayallthecostsassociatedwiththeconnection,includingupstreamnetworkreinforcements,ifany.

Theshallowapproachislikelytoencouragemoreconnectionsandreduceincidenceswherecustomersrequire

connectionrefundsq


LEGAL SERVICES- 2012/1318 LEGAL SERVICES- 2012/13 19

Regulatory Framework for Urban Water Supply and Sewerage Services

Oneof themain focusareasof theAuthoritywastodevelopsubsidiary legislation forwaterandsewerageservicesregulationandacompositelicenceforWASCO.Aftertheengagementofaconsultantandintensiveconsultations with key stakeholders such as Commissioner of Water, Ministries of Environment, Health,MEMWA,WASCO(Pty)LtdandtheDepartmentofRuralWaterSupply(DRWS),therewasahugeprogressregardingcompletionoftheabovementionedactivity.

RegulationsandRulesdealingwithLicenseFeesandCustomerLeviesandCustomerComplaintsResolutionforUrbanWaterandSewerageServiceswerefinalisedandtheywerependingpublication.

Regulatory Compliance

CompliancebyregulatedentitieshasconsistentlybeenachallengethattheAuthorityhasfacedsinceinceptionofregulationoftheelectricitysector.Asanexample,itmaybepointedoutthatsomeoftheobligationsofLECincludereportingon issuessuchasavailabilityofresources,regulatoryaccounts, informationprovisionandpreparationofcodesofpracticewithintimelinessetbytheLicenceandprovisionofdatasuchasonelectricitymaximumdemand.LEChasbeenlessthanforthcomingwithregardtoreportingonprogressregardingtheseissues.BoththeLesothoHighlandsDevelopmentAuthority(LHDA)andtheRuralElectrificationUnit(REU)haveimprovedtheirreportingandtheAuthorityisoftheviewthatiftheycouldsustainandimprovefurther,theywouldeventuallyfullyobligewiththeregulatoryreportingrequirements.

Toaddressthecontinuednon-compliance,thelicenseeswereengagedatvariouslevelssuchasworkshopsandmeetingsandrevisionofthereportingforms.TheAuthorityshallcontinuetoengageLEC,LHDAandREUtoensurethatregularreportingonESIdataisadheredto,soastoinculcateacultureofadherencetotheprescriptsofregulation.

BoardActivities

TheBoardconsistsofseven(7)non-executivemembersandtheChiefExecutivewhoisanex-officiomember.Duringthereportingperiod,theBoardheldatotalofeight(8)meetings,ofwhichfour(4)wereordinaryand

Legal Services Department 6

another four (4)extra-ordinary.TheBoardMembers’attendanceof themeetingsheldunder thereportingperiod is reflected below in table 3. TheManager – Legal Services provides the secretarial services forthe Board. Amongst others, the Board considered various regulatory and administrative instruments thatincludedtheAuthority’sBusinessPlanfor2013/14,LesothoElectricityandWaterAuthority(LEWA)ChargingPrinciples forElectricityandWaterandSewerage,LesothoElectricityAuthority (LEA)ElectricityConnectionChargesGuidelines,extensionofalicenceexemptionfortheREUElectricityAccessPilotProjects(EAPPs)andregulatoryinstrumentsforurbanwaterandsewerageservices.

TheBoardhasfour(4)Committeeswhichassistindischargingitsresponsibilities.AlltheCommitteesconsistofnon-executivememberswhoarealsothemembersoftheBoard,excepttheAuditCommitteewhichhasonenon-executivememberwhoisnotaMemberoftheBoard.TheCommitteesmetduringthereportingperiodto discharge their fiduciary duties and responsibilities as set out in their respective committees’ terms ofreference.TheChiefExecutiveandManagersattendthecommitteemeetingsbyinvitationandhavenovotingrights.TheattendanceoftheCommitteemeetingsheldduringtheperiodunderreviewisreflectedintable4below.

Prof. F. L. Moloi (Chairperson)

Dr. M. Kotelo-‘Molaoa

Mr. R. Motlojoa

Mrs. M. Maliehe

Dr. M. Matete

Adv. K. Mohau

Dr. L. Thamae

Assoc. Prof. N. Rapapa (Chief Executive)

4/4

4/4

3/4

4/4

3/4

3/4

4/4

4/4

Table 3: The Board Members’ Attendance of the Meetings during 2012/13

Members Meetings (attended/total held)Ordinary Meetings Extra-Ordinary Meetings

4/4

3/4

3/4

4/4

1/4

4/4

4/4

4/4

Audit

Customer Services

Human Resource, Finance and Administration

Pricing and Tariffs Committee

Mrs. Maliehe (Chairperson)

Mr. R. Motlojoa

Dr. L. Thamae

Mr. M. Taole (External Member)

Prof. F. L. Moloi (Chairperson)


Adv. K. Mohau

Mr. R. Motlojoa (Chairperson)

Dr. M. Matete

Adv. K. Mohau

Dr. M. Matete (Chairperson)

Mrs. M. Maliehe


Dr. L. Thamae

Table 4: The Committees’ Members Attendance of the Meetings during 2012/13

Committee Members Meetings (attended/total held)

3/3

3/3

3/3

3/3

5/5

4/5

5/5

4/4

2/4

4/4

3/3

3/3

1/3

3/3


Public Awareness

TheAuthority continuedwith endeavours toattain sustainable empowermentof stakeholders in regulationof electricity and urban water and sewerage services. To this end, various efforts at communicating withthepublicusingdifferentmeanssuchas electronicandprintmediawereundertaken.Atotalof21radioprogrammeswereheldduringthereportingperiod.Mainly,thebroadcastsaimedtoinformthepublicabouttheAuthority’simpendingassumptionofregulationofurbanwaterandsewerageservices,andelectricityqualityofserviceissues.OtherbroadcastthemesincludedLECtariffadjustmentapplicationandpublicconsultationsfor2012/13andLEA’scurrentmandate.PressreleasesonLEC’sapplicationfor2012/13tariffreviewanditsdeterminationwereissued.Publicnoticeswerebroadcastonelectronicmediaandpublishedonprintmedia.LEWAnoticesweredisplayedonDistrictAdministrators’offices.Plannedcommunication interventionssuchaspublicmeetingswereheldwithstakeholders.SuchmeetingswereheldinButha-Buthe,Berea,Mohale’sHoek,Quthing,MafetengandThaba-Tsekatowns.Topicsdiscussedwith the public therein included, the importance of public participation in regulatory processes, ElectricityConnectionChargesGuidelinesandLEA’sassumptionofregulationofurbanwaterandsewerageservices.

LEAwebsitecontentwasregularlyupdatedandpublicnotices,advertisementsandvacancieswere furtherpostedonthemedium.Intheinterim,aprototypeLEWAwebsitewasdesignedandpopulatedwiththerelevantinformation.Topromoteciviceducationonregulation,twoadvertorialsontransformationofLEAtoamultisectorregulatorwerepublishedinnewspapers.OrganisationalbrochuresandotherpromotionalmaterialswereusedtobrandLEAatvariouseventssuchastheRERAAGMandstakeholderworkshopsinthecountry.

TwomeetingswereheldwithdistrictcouncillorsinQuthingandThaba-Tsekaaftergeneralpublicmeetingshadbeenheldinthetwodistricts.

Customer Affairs Department 7

CUSTOMER AFFAIRS- 2012/13 21CUSTOMER AFFAIRS- 2012/1320

LEA officials discuss issues of electricity and water services provision by regulated utilities with the public in Teyateyaneng.

Outreach Activities

InordertoformalisetheworkingrelationshipbetweenLEAandDistrictAdministrators(DAs),aMemorandumof Understanding (MOU) was prepared and sent to offices of the Principal Secretary –Ministry of LocalGovernmentandChieftainshipandtheDAsoffices forconsideration.Theefforts toestablishthe linkswithstakeholdersthroughtheDAsofficeswasalsoboostedwhendistrictcontactspointswereappointedinThaba-Tseka,Mohale’sHoek,Mafeteng,Maseru,Quthing,Berea,Butha-ButheandQacha’sNekdistricts.ThecontactpointsliaisedwithLEAonavarietyofregulatoryissuessuchascomplaintshandlingandpublicitysurroundingregulatoryissues.

Customer Complaints

Thetotalnumberofcomplaintsreceivedwithinthereportingperiodwas24.Ofthese,21wereresolvedandthreewerependingresolution.Abreakdownofthecomplaintsshowsthat60%ofcomplaintswereonwayleaveissues,30%onservicedeliverywhile10%wereabouthighquotations.Thepercentageofresolvedcomplaintsduringtheyearwas87.5%comparedwith70%ofcomplaintsresolvedin2011/12and50%in2010/11.ThiswaslargelyaresultofenhancedresolutionmechanismsdevelopedandimplementedbyLEA.

Figure3 above reflects a positive trend in that the annual relative number of complaints unresolved from2010/2011to2012/13hasbeendecliningandthisisconsistentwiththeAuthority’sgoalofensuringthat

allthecomplaintsareresolvedontimeq

Received complaints Resolved complaints Pending complaints

2010 - 2011

2011 - 2012

2012 - 2013

30

20

10

0

Figure 3: Synoptic Complaints Summary 2010/11-2012/13


FINANCE, HUMAN RESOURCES & ADMINISTRATION - 2012/1322 FINANCE, HUMAN RESOURCES & ADMINISTRATION - 2012/13 23

FINANCE

Operating Budget

TheAuthority’s budget for2012/13was financed through licence fees, customer levies and contributionfromtheWorldBank.TheWorldBank’scontributionwasusedtofinancecapacitybuildingactivitiesforwaterregulation,partofstaffcostsandthecostsforthedevelopmentofthelegalandregulatoryinstrumentsforurbanwaterandsewerageservicesregulation.

TheBusinessPlantogetherwiththeBudgetfor2013/14werepreparedandapproved.SimilartotheBudgetfor2012/13,theBudgetfor2013/14istobefinancedbytheLicencefees,CustomerLeviesandGrantsfromcooperatingpartners.

Universal Access Fund (UAF)

TheAuthoritydevelopedaprocedure fordisbursementsofUAF fundsand theobjectivesof theprocedure,amongstothers,aretoensureUAFfundsareusedinaccordancewithLEA’sFinancialStandingOrdersandestablishresponsibilities forensuringcompliancewithLesothoElectricityAuthority (UniversalAccessFund)Rules,2011.TheapprovedUAFbudget for electrificationwasM8,750,997.00 for thereportingperiod.However,nodisbursementsweremadeinthereportingyearunderUAFbudgetastherewerenoelectrificationprojectsundertakenwiththeexceptionofthepaymentofabalancebroughtforwardfrom2011/12projectforHaRafolatsaneandtheretentionfees.

Financial Statements and Management

The2011/12Financial Statements of theAuthoritywere audited andwere publishedas part of the LEAAnnualReportfor2011/12.

Monthlyreportsonstatusoffundsandexpenditurewerepreparedintheperiodunderreview.LEAaccountswerecontinuallyreconciledduringthe2012/13financialyear.

Finance, Human Resources & Administration Department 8

HUMAN RESOURCES

Staff Appointments

TheAuthority’sstaffcomplimentincreasedasaresultofaneedforafullyfunctionalhumanresourcesoffice.Inthisregardafulltimehumanresourcespositionwasestablishedandfilledaccordingly.

Training

AlllevelsofstaffunderwenttraininginlinewiththeLEATrainingPlan.ThetrainingwasonareassuchasPublic-Private Partnership for Infrastructure, ContractsDispute Resolution, Renewable Energy Policy, TechnologyStandardisationandDraftingOfStandards,WiringCode (SouthAfricanNationalStandard10142),PowerPlanning,CorporateGovernance,ManagingPowerSectorReformandRegulation,PowerPurchaseAgreement-allofwhicharecriticaltocapacitybuildingincoreregulatoryfunctions.SupportstaffalsoundertooktrainingonareassuchasTalentAttraction,DevelopmentandManagement,EffectiveBusinessReportWritingandReception and Frontline Skills. In order to ensure staff’s continuous professional development (CPD) theAuthorityfacilitatedtheregistrationofstaffandrenewalofmembershipwithvariousprofessionalbodies.

Performance Management System (PMS)

ThePMSforassessingworkperformanceofallLEAstaffwasrolledouttocoverperformanceofallemployees.Theaimofthesystemistoenhanceemployees’productivity,rewardgoodperformanceanddesiredbehaviourandattitudetowardswork.

Staff Wellness, Safety and Health

Inordertopromotewelfareandmoraleofitsemployees,theAuthorityintroducedawellnessprogramthatcovers thehealth, safety,HIVandAIDSwellness aspects of employees. Thepurposeof the program is toestablishaworkenvironment thatpromoteshealthy lifestyles,decreasetheriskofdiseasespread,reduceworkplaceaccidentsandenhancethequalityofemployees’life.

ADMINISTRATION

Acquirement of Office Space

EffortstoacquireofficespaceforalltheemployeesweresuccessfulinthatLEAobtainedanofficespaceonMoposoBuilding7thfloorwhereallstaffwouldbeaccommodatedinthe2013/14financialyear.Relocation

processeshadbegunattheendofMarch2013q


TheAuthoritycontinued itscooperation initiativeswithvarious internationalandregionalbodies inorder toenhanceitscapacityinregulatingboththeelectricitysectorandurbanwaterandsewerageservices.OfthesetheReporthasmadeafewhighlights.

AFUR

AsmemberofthepanAfricanumbrellautilitiesregulatoryassociation,AfricanForumUtility forRegulators(AFUR),theAuthoritytookpartinAFUR’seventssuchastheAFUR’sConferenceandAnnualGeneralMeeting(AGM)inApril2012whichwasheldinJohannesburg,SouthAfrica.

ESAWAS

FollowingformaladmissiontothebodyLEAtookpartintheEasternandSouthernAfricaWaterandSanitationRegulatorsAssociation(ESAWAS)AGMandConferenceinSeptember2012(previouslyLEAwasanobserver).TheinitiativeofjoiningESAWASwasinanticipationofimpendingassumptionofregulationofurbanandwaterandsewerageservices.

RERA

The Authority continued participating in various meetings and consultations of portfolio committee andsubcommittee levelsofRegionalElectricityRegulatorsAssociationofSouthernAfrica (RERA) in2012/13.InNovember2012,LEAparticipatedinRERA’sConference,AGMand10thAnniversaryheldatAssociation’sheadquartersinWindhoek,Namibia.RERAalsoorganisedseveraltrainingeventswhichwereattendedbyLEAstaff.

InJuly2012LEAbecameoneoftheRERAmembersthatparticipatedintheAfricanElectricityRegulatorPeerReviewandLearningNetworkPhaseIIexercisesponsoredbytheUniversityofCapeTown(UCT)andorganisedundertheauspicesofRERA.UnderthisexerciseRERAmemberregulatorsengageinapeerreviewprocessinvolvingmembersinvariousregulatoryaspectssuchasregulatorygovernance,licensing,impact,tariffsetting,customercomplaintshandlingmechanismsandregulatoryimpact.

Cooperation with Regional & International Bodies 9

COOPERATION WITH REGIONAL & INTERNATIONAL BODIES - 2012/1324

LEA Chief Executive Associate Professor Ntoi Rapapa addresses delegates at the 10th RERA summit in Windhoek in November 2012.

TheAuthorityrevieweddocumentsonRERAbestpracticeinregulationtoensurethatLEAasamemberofRERAcontributedtotheeffortsaimedat fosteringandadoptionofworldclassregulatorystandards intheregion.

ICER

TheAuthoritysharedinformationwithotherInternationalConfederationofEnergyRegulators(ICER)membersonbestpracticeandphilosophyinregulationofenergysector.Furthermore,documentationandcorrespondencehasbeenexchangedbetweentheAuthorityandICER.

UNECA

In April 2012, United Nations Economic Commission for Africa (UNECA) in collaboration with LEA held aworkshoptoprovideplatformfordiscussionondeploymentofPPPsinrenewableenergy(RE)inLesotho.TheworkshopwasoneofthehighlevelstakeholdereventsthathaveunderscoredthecardinalroleoftheAuthorityinfacilitatingPPPsimplementationinLesotho’senergysector,inlinewiththecurrentneedtoaddressissuesaround security of supply in the country. Once policy issues have been addressed at the higher level the

regulatoryframeworkandimplementationofPPPsinREintheenergysectorwouldberealisedq

COOPERATION WITH REGIONAL & INTERNATIONAL BODIES - 2012/13 25


Licensees’ Performance

Section21(1)(i)oftheLEAActmandatestheAuthoritytoensurethecollection,publicationanddisseminationof information relating to standards of performance by licensed operators and on the electricity sector inLesotho for use by the industry, consumers and prospective investors. It is on the basis of this, that theperformanceoftheLEA’slicenseesisreportedhere.MindfulofitsreportingrequirementsasoutlinedintheAct, theLEApreparedandagreedreporting formatswith its licensees (LECandLHDA-‘MuelaHydropowerPlant).Thelicenseesarethusexpectedtoreportaspertheagreedformats.

However,asmentionedpreviouslytheLicenseescontinuedtoprovideLEAwithincompletedataatirregularintervals.

Lesotho Electricity Company (LEC)

LECholdsaCompositeLicenseforTransmissionandDistribution&SupplyissuedbyLEAinDecember2006.

(a)DemandGrowth

LECenergysalesgrewby24GWh(3.7%),from656GWhin2011/12to680GWhinthereportingperiod.TheLECtotalsystempeakdemandgrewfrom141.69to147.63MW,anincreaseof4.2%inthereportingperiod.

(b)Electrification

Atotalof16,149newconnectionsweremadeinthereportingyear,areductionof6,326whichisa28.1%decrease from last year’s figureof22,475. Thenewconnections increased theLECcustomerbase from128,583to144,732ofwhich135,513isdomestic.Usinghouseholdstatisticsfromthenationalcensusandhouseholdsurveyof2006,thistranslatestoabout30.2%ofLesothohouseholdsconnectedtogridelectricity.Ifthisconnectionrateismaintainedforthenexttwofinancialyears,theGovernment’stargetof35%householdsconnectedtoelectricityby2015wouldbemet.

Electricity Sector Developments 10

ELECTRICITY SECTOR DEVELOPMENTS - 2012/1326 ELECTRICITY SECTOR DEVELOPMENTS - 2012/13 27

(c)SystemAvailability

Themonthlysystemavailabilityforbothtransmissionanddistributionsystemsaredepictedgraphicallyinthefigure4belowassetagainsttherespectivecorporatetargetlevels.

Thetransmissionsystemavailabilityhasbeenconsistentlyabovetarget forthewholereportingperiod.Theaveragesystemavailabilityfortheyearwas99.92%againstthetargetannualaverageof99.00%.

Similarly,theavailabilityofthedistributionsystemwasabovetarget,withanaverageof99.66%againstanaveragetargetof95.00%perannum.

Lesotho Highlands Development Authority (‘Muela)

LHDAholdsaGenerationLicenceissuedbyLEAinDecember2006.

(a)ElectricitySales

The‘Muelahydropowerplant(MHP)producedatotalenergyof461GWh,adeficitof1.3%fromtheplannedgenerationof467GWh.ThisinsufficiencywasmainlyduetoaplannedoutageinOctoberandNovember2012asaresultof‘Mueladeliverytunnelinspection.Ofthissentoutenergy,444.68GWhwassoldtoLECyielding‘MuelatotalrevenueofM50.55million,resultinginanaveragesellingpriceofM0.11/kWh.Theremaining14GWhwasexportedtoEskomatanaveragepriceofM0.19/kWh.Apeakpowerdemandof80.45MWwasproducedbyMHPduringthereportingperiod.

Source: LEC

Transmission

Distribution

Target Transmission

Target Distribution

Apr-12

99.97%

99.55%

99%

95%

May-12

99.96%

99.76%

99%

95%

Jun-12

99.97%

99.75%

99%

95%

Jul-12

99.96%

99.78%

99%

95%

Aug-12

99.88%

99.69%

99%

95%

Sep-12

99.98%

99.00%

99%

95%

Oct-12

99.94%

99.64%

99%

95%

Nov-12

99.90%

99.73%

99%

95%

Dec-12

99.89%

99.90%

99%

95%

Jan-13

99.90%

99.89%

99%

95%

Feb-13

99.89%

99.61%

99%

95%

Mar-13

99.85%

99.63%

99%

95%

Apr-12

100.00%

99.00%

98.00%

97.00%

96.00%

95.00%

94.00%

Jun-12 Aug-12 Oct-12 Dec-12 Feb-13

Availability

ELECTRICITY SECTOR DEVELOPMENTS - 2012/1328

Review of Limkokwing Programmes Draft Final Report

ELECTRICITY SECTOR DEVELOPMENTS - 2012/13 29

Review of Limkokwing Programmes Draft Final Report

(b)PowerPlant’sTechnicalPerformance

Thetechnicalperformanceofpowerplantsismeasuredbyanumberofparameters,mostofwhichareratios.Theratiosareindicatorsofhowwellaplantisutilised,operatedandmaintained.SomeoftheindicatorsthathavebeenselectedandagreedfortheperformanceofMHParethefollowing:

Monthly Indicators

Themonthlyindicatorshavebeenselectedtomeasuretheperformanceoftheplantasawhole.

Load Factor (LF) –Theratiooftheactualenergyproducedtotheenergythatwouldhavebeenproducediftheplanthadrunatmaximumdemandoverthesamemonth.Itisalsoexpressedastheratiooftheaveragedemandtothemaximumdemand.

Operating Factor (OF) –Theratioofthetimeduringwhichtheplantwasoperationaltothetotaltime inamonth.

Annual Indicators

Theannualindicatorshavebeenselectedtomeasuretheperformanceoftheindividualunits.

Unit Capacity Factor (CF) –The ratio of the actual energy produced to the energy thatwould have beenproducediftheplanthadrunatratedpoweroverthesameyear.

Energy Availability Factor (EAF)-Theratiooftheenergythattheavailablecapacitycouldhaveproducedtotheenergythatthereference(rated)unitpowercouldhaveproducedduringthesameyear.Theenergythattheavailablecapacitycouldhaveproducedisequaltothereferenceenergyminusalltheplannedandunplanned(withinandoutsideplantmanagementcontrol)losses.

Unit Capability Factor (UCF)-Theratiooftheavailableenergygenerationtothereferenceenergygenerationoverthesameyear.Theavailableenergyinthiscaseislimitedtolosseswithinplantmanagementcontrol.

Planned Capability Loss Factor (PCLF)–Ratioofplannedenergylossestothereferenceenergy.

Unplanned Capability Loss Factor (UCLF) – Ratio of unplanned energy losses (under plantmanagementcontrol)tothereferenceenergy.

TheperformanceofMHPinthereportingperiodisgivenbelowbythegraphicalrepresentationsofthemonthlyindicators (LFandOF) in figure4and the tabulationof theannual indicators in table3.The indicatorsareexpressedinpercentages.Figure4showsthatthepatternofthetwoindicatorsisalmostidentical.Thisgoestoexplainthattheplantoperatedatitsavailablepeakcapacity,itsmaximumcapacityinthiscase,withalmostnointerruptionfortheperiodApriltoSeptember2012.However,glaringfromfigure4isanabsoluteinterruptionofplantfortheperiodOctobertoNovember2012.Thiswasduetoinspectionandmaintenanceofthewatertransfertunnelfrom‘MuelatotheRepublicofSouthAfrica.Fromtable3itisobservedthatperformanceofunits2and3issimilarwiththeexceptionthatunit2’sCFisslightlylowerat72.9%.Unit1wastheleastavailableofthethreeunitsasdepictedbyrelativelylowervaluesfor,EAFandUCFandacorrespondinglyrelativelyhighervalueforPCLF.TheUCLFisslightlyabovezeroforallunitsandthisissobecauseoflownumberofoutagesthatarereportedasoutsideplantmanagementcontrol.

AccidentsandNumberofUndesiredEnvironmentalIncidents.Inthereportingperiodtheyrecordedzero(0)inalltheperformanceindicators.

(c)SafetyandEnvironmentalIncidents

Thepertinentperformance indicatorsthat ‘Muelauses forassessingtheirperformance inthisregardare:Industrial Safety Accident rate per 1,000,000 man-hours, Number of Vehicle Accidents and Number ofUndesiredEnvironmental Incidents. In the reportingperiodLHDArecorded zero (0) inall theperformanceindicators.

Unit

Identifier

Unit 1

Unit 2

Unit 3

Energy

Availability

Factor (EAF)

69.6

80.5

79.5

Capacity

Factor

(CF

87.5

72.9

94.3

Unit

Capability

Factor (UCF)

78.2

82.9

82.8

Unplanned

Capability Loss

Factor (UCLF)

0.2

0.0

0.1

Table 3: Performance of MHP Units in 2012/13 – Ratios Expressed in Percentages

Planned

Capability Loss

Factor (PCLF)

21.65

17.05

17.09

Source: LHDA Reports

120.00

100.00

80.00

60.00

40.00

20.00

0.00

April

Mar

ch

Febr

uary

Janu

ary

Dec

embe

r

Nov

embe

r

Oct

ober

Sept

embe

r

Augu

st

July

June

May

LFActual OF

Figure 4: MHP Load and Operating Factors (Percentages) for 2012/13

Source: LHDA Reports

Planned OF


FINANCIAL STATEMENTS - 2012/13 31FINANCIAL STATEMENTS - 2012/1330

Department of Energy (Rural Electrification Unit)

TheDepartment of Energy has held a license exemption for running three electricity access pilot projects(EAPPs)sinceOctober2007.Theexemption,whichexpiredinSeptember2012,hadbeenfurtherextendeduntilSeptember30,2014.TheDepartmentwasfurtherissuedanexemptionthatwouldexpirein2014,forthe33kVHaMpiti–HaSekakelineandtheassociateddistributionandsupplynetworks.

(a)ElectrificationAccessPilotprojects(EAPPs)

i.Qholaqhoe

TheQholaqhoeEAPP isconnectedtotheLECnetwork.Atotalof253customerswasrecordedduringthereportingyear,an increasebyone(1)customeroverthepreviousreporting figure.Non-paymentofbillsbycustomersremainedamajorchallenge.

ii.Dilli-Dilli/Sixondo

TheDilli-Dilli/SixondoEAPPisconnectedtoEskom(RepublicofSouthAfrica)network.Atotalnumberof276customerswasrecordedduringthereportingyear,a25%increaseoverthepreviousyear’sfigure.Theflatratemeterswhichdidnotaccumulateelectricityunitsremainedamajordissatisfactionofthecustomers.Eskomhadfourplannedoutagestoundertakepreventivemaintenanceonthenetworkandeachlastedforaboutaday.

iii.HaMpiti-HaSekakeEAPPTheHaMpiti-HaSekakeEAPP isconnectedtoLECnetwork.Thevendingsystemwas in fulloperationandtamperresetsoftwarehadbeensecuredandthetamperedmetershadbeenrestoredbacktoservice.

Electricity theftwas the highest contributor to non technical electricity losses during the reporting period.Tocurbit,regularinspectionswereundertakenbyREUandthecontactor(LSP)tocheckifthemetershadbeenbypassedornot.About220outstandinghouseholdsatTebellonghadbeenelectrifiedbytheendofthereportingperiod.Thisincreasedthetotalnumberofhouseholdconnectedundertheprojectto1,927.

Thusthetotalnumberofcustomersconnectedtoelectricityunderthethreeprojectswas2456,equatingtoaboutone(1)householdinevery200householdsinthecountry.

(b)LesothoRenewableEnergyBasedRuralElectrification

TheLesothoRenewableEnergyBasedRuralElectrification(LREBRE)projectwasin itsfifthandfinalyearofimplementation.Theprojectwasclosedon31stMarch2013.Overitslifetimetheprojecthadinstalled1,537homesolarsystemsoutofa5,000projecttarget,asuccessfactorof31%.ThemajorconstrainthadbeenlackoffundsforthepurchasingandinstallationofthesystemsfromGovernmentbudget.

ThestreetlightingprojectthatwasfinancedbyaM5milliongrantfromtheChineseGovernmentcommencedinJanuary2013andwouldbecommissionedinMay2013.ThevillagescoveredwereMountMoorosi(Quthing),HaNtsi(Maseru)andPitseng(Leribe).

Generation

Afullfeasibilitystudyfordevelopmentof1200MWpumpedstorageschemewasbeingundertaken.Theplanwastoexport1000MWofthepowerandconsume200MWwithinLesotho.Letšengwindfarmhadnotmadeprogresssincethelastreportingperiod.TheImplementationAgreementfortheprojecthadbeensignedandthemajoroutstandingissuewasthePowerPurchaseAgreementwithLEC.


Board Approval and Statement of Responsibility

Members of the Board are required by law to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Authority as at the end of the financial year and of the results of its operations and cash flows for that period. The annual financial statements set out on pages 34 to 47 are the responsibility of Members of the Board.

Members of the Board are responsible for ensuring that the Authority keeps accounting records which disclose with reasonable accuracy, at any time, the financial position of the Authority and which enable them to ensure that the financial statements comply with the Lesotho Electricity Authority Act No.12 of 2002 as amended.

Members of the Board are also responsible for taking such steps that are reasonably open to them to safeguard the assets of the Authority and to prevent and detect fraud and other irregularities. Members of the Board consider that, in preparing the financial statements for the year ended 31 March 2013 set out on pages 34 to 47, the Authority has used appropriate accounting policies, consistently applied, and were supported by, reasonable and prudent judgments and estimates. Members of the Board also consider that all applicable International Financial Reporting Standards have been followed and confirm that the financial statements have been prepared on a going concern basis.

The auditors’ responsibilities are stated in their report on page 33.

Members of the Board are satisfied that Management introduced and maintained adequate internal controls to ensure that dependable records exist for the preparation of the annual financial statements, to safeguard the assets of the Authority, and to ensure that all transactions are duly authorised.

Against this background, the financial statements set out on pages 34 to 47 which are stated in Maloti, the currency of Lesotho, have been approved and authorised for issue on 13 September 2013 by Members of the Board and signed on its behalf by:

Chairperson Member

Lesotho Electricity Authority Financial Statements for the year ended 31 March 2013


Report of the Auditor General

I have audited the financial statements of Lesotho Electricity Authority set out on pages 34 to 47 for the period ended 31 March, 2013. These financial statements are the responsibility of the Authority’s Members of the Board. My responsibility is to express an opinion on these financial statements based on my audit.

Management’s Responsibility for the Financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

My responsibility is to express an opinion on these financial statements based on the audit. The audit has been conducted in accordance with International Standards on Auditing. Those standards require auditors to comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risks assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion to the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Authority at 31 March 2012, and of its financial performance and its cash flows for the year ended in accordance with International Financial Reporting Standards and in the manner required by the Lesotho Electricity Authority Act No. 12 of 2002.

Lucy. L. Liphafa (Mrs) Auditor General



FINANCIAL STATEMENTS - 2012/1334 FINANCIAL STATEMENTS - 2012/13 35



Statement of financial position as at 31 March 2013

Assets

Non-CurrentAssetsProperty, Plant and EquipmentCurrentAssetsCash & BankTrade & Other ReceivablesAssets Held for Sale

TotalAssets

FUNDS&LIABILITIESFundsandReserves Capital GrantRetained Surplus/(Deficit)Revaluation ReserveUniversal Access Fund Balance

Non-CurrentLiabilitiesGratuity

CurrentLiabilitiesBank OverdraftCurrent Portion Long Term LoanTrade & Other Payables

TotalFundsandLiabilities

2012M

2,632,306

13,922,8655,828,937

-19,751,80222,384,108

1,004,7205,632,966

324,91511,352,072

18,314,673

2,111,587

428,979

-1,528,869

1,957,84822,384,108

2013M

2,481,567

32,000,2296,721,727

220,00038,941,94841,423,523

502,3655,378,140

306,33029,232,780

35,419,615

4,114,710

525,503

707,969655,726

1,889,19841,423,523

Notes

7

945

8121311

6

10

6

Statement of comprehensive income for the year ended 31 March 2013

INCOMECustomers’ LevyLicense FeesGoL & World Bank GrantsCapital Grant ReleaseUniversal Access Fund

EXPENDITUREStaff CostsDepreciationDirectors ExpensesAudit FeeUniversal Access FundOperating Costs

SurplusFromOperationsGain/(Loss) Assets SaleFinanceIncomeFinance CostsTotal Other Income

Surplus/(Deficit)fortheyear

COMPREHENSIVEINCOMEGains on Property Revaluation TotalComprehensiveIncome(LossfortheYear)

2012M

13,763,6752,914,1302,846,929

508,71040,063,887

60,097,331

11,230,5351,025,4341,312,041

22,05040,063,887

5,880,27059,534,217

563,114-

116,546(12,979)103,567

666,681

-666,681

2013M

15,545,4663,301,5524,190,271

502,3551,556,237

25,095,881

14,385,367 1,185,526

861,78323,152

1,556,2377,490,051

25,502,116

(406,235)(17,456)168,865

-151,409

(254,826)

206,484(48,342)

Notes

328

11

157

15

1115




Statement of Changes in Funds for the year ended 31 March 2013


Statement of cash flow for the year ended 31 March 2013

SurplusfortheYearAdjustmentfor:(Increase)/Decrease in ReceivablesIncrease/(Decrease) in PayablesDepreciationCapital Grant AmortisationGain /Loss on Disposal of Fixed Assets

NetCashfromOperatingActivities

InvestingActivities:

Purchase of Fixed AssetsRepayment – Bank LoanDisposal Proceeds NetCashUsedinInvestingActivities

FinancingActivitiesGratuityUniversal Access FundNetCashUsedinFinancingActivitiesCashandCashEquivalents:

Net increase in Cash and Cash EquivalentsCash and Cash Equivalents at the Beginning of the YearCashandCashEquivalentsattheendoftheyear

Notes

7

2012M

666,681

133,789(935,378)1,025,434(508,710)

-

381,816

(717,209) (337,155)

-

(1,054,364)

-1,617,428

(21,325,390)(19,707,962)

(20,380,510)33,874,398

13,493,888

2013M

(254,826)

(892,790)(165,093)1,185,526(502,355)

17,456

(612,082)

(1,310,911) -

20,000

(1,290,911)

2,003,12317,880,708

19,883,831

17,980,83813,493,888

31,474,726

RetainedSurplus

M

4,743,190--

223,095-

666,681

5,632,966

---

(254,826) -

5,378,140

CapitalGrants

M

1,513,430(508,710)

----

1,004,720

(502,355)---

-

502,365

RevaluationReserve

M

548,010--

(223,095)--

324,915

--

(18,585)--

306,330

Balanceat31/03/2011Amortisation for the yearGrantRevaluation ReserveUniversal Access FundSurplus/(Deficit) for the year

Balanceat31/03/2012

Amortisation for the yearGrantsRevaluation ReserveSurplus/(Deficit) for the yearUniversal Access Fund

Balanceat31/03/2013

UniversalAccessFund

M

32,677,462---

(21,325,390)-

11,352,072

----

17,880,708

29,232,780

TotalM

39,482,092(508,710)

--

(21,325,390)666,681

18,314,673

(502,355)-

(18,585)(254,826)

17,880,708

35,419,615




Notes to the Financial Statements for the year ended 31 March 2013

ACCOUNTINGPOLICIES

BasisofAccountingThe principal accounting policies of the Authority, which are set below, have been consistently followed in all material respects and comply with International Financial Reporting Standards and the Lesotho Electricity Authority Act No.12 of 2002 (as amended). These financial statements have been prepared on the historical cost basis except for financial assets, which are stated at fair values and incorporate the principal accounting policies. The financial statements are prepared on a going concern basis.

Property,PlantandEquipmentProperty, plant and equipment are stated at cost/valuation less accumulated depreciation less impairment losses where applicable. Depreciation is calculated on a straight line basis from the time the property, plant and equipment were available for use, so as to write off their cost over their expected useful lives, taking into account their residual values. The following expected useful lives are used in the calculation of depreciation:

Office Fittings 5 Years Office Furniture 5 Years Office Equipment 4 Years IT Equipment 3 Years Motor Vehicles 4 Years Freehold Refurbishment 3 Years

Consumables are assets that cost less than M1,500 as per the LEA Financial Standing Orders hence they are written off in the period of purchase.

ForeignCurrencyTranslationTransactions in foreign currencies are translated to Maloti at the foreign exchange rate ruling at the date of the transaction.

CashandCashequivalentsCash and cash equivalents include cash in hand, deposits held at hourly call with the banks less bank overdrafts.

TaxationNo provision for taxation is required as the Authority is exempt from taxation.

RevenueRecognition

RevenueIncome comprises of customer levy, licence fees from LEC and LHDA, bank interest and grants from Government of Lesotho and World Bank , and is recognized when invoiced or at the time of disbursement by the relevant institution.

InterestIncomeInterest is recognized on a time proportion basis taking account the effective yield on the investment.

RevenueGrantsRevenue grants are recognized as income to match them with related costs, which they have been intended to compensate. Capital grants are recognized as deferred credit and are recognized in the income expenditure on the basis of matching them with the related costs for which the grants are intended to cover. They are amortised over the useful lives of assets.

1.

1.1

1.2

1.3

1.4

1.5

1.5.1

1.5.2

1.5.3



LeasesLeases on which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under the operating leases are charged to the income statement on a contracted amounts basis over the period of the lease.

TradeandOtherReceivablesTrade and other receivables originated by the enterprise are stated at fair value of consideration receivables less impairment for trade receivables if any.

TradeandotherpayablesTrade and other payables are stated at their fair values.

PreviousYear’sFiguresFigures for the previous year have been regrouped and stated wherever necessary to conform to current year’s presentation.

FinancialInstrumentsExposure to credit risk and interest rate risk arising in the normal course of the Authority’s business.

FinancialAssetsThe principal financial assets are cash and bank balances, investments, trade and other receivables. These assets are originated by the enterprise and are accounted for at trade rate.

FinancialLiabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into. The principal financial liabilities are trade and other payables.

InterestRateRiskThe Authority is exposed to various risks associated with the effect of fluctuations in the prevailing levels of market rates of interest on its cash resources and investments. The cash resources are managed to ensure that surplus funds are invested in a manner to achieve maximum returns while minimizing risks.

CreditRiskThe financial assets of the Authority that are subject to credit risk consist mainly of cash resources, receivables and investments. The cash resources and investments are placed with reputable financial institutions. Where appropriate, adequate provisions are made for bad debts.

FairvaluesThe fair values of most financial instruments are substantially identical to carrying values reflected in the statement of financial position.

GratuityThe Authority provides for gratuity for contract staff as per the terms of their respective employment contracts.

1.6

1.7

1.8

1.9

1.10

1.11

1.12




ImpairmentofAssetsImpairment losses of continuing operations are recognized in the income statement in those expense categories consistent with the function of the impaired assets.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

AdoptionofIFRSsDuringtheYearThe Authority has adopted the following revised standards during the year and comparative figures have been amended as required. Adoption of revised standards does not have any effect on the funds and reserves as at 31 March 2009.IAS 1 Presentation of Financial Statements;IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;IAS 10 Events after the Reporting Period;IAS 16 Property, Plant and Equipment;IAS 17 Leases;IAS 20 Accounting for Government Grants and Disclosure of Government Assistance;IAS 21 The Effects of Changes in Foreign Exchange Rates;IAS 24 Related Parties Disclosures;IAS 39 Financial Instruments: Recognition and Measurement; IAS 40 Investment Property, and IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

IFRS’snotAdoptedThe Authority has not applied the following IFRSs that have been issued.IFRS 2 Shared-based Payments;IFRS 3 Business Combinations;IFRS 4 Insurance Contracts, and IFRS 6 Exploration for and Evaluation of Mineral Resources.

These standards do not apply to the activities of the Authority.

1.13

1.14


2. WorldBank/GoLRevenueGrant 3. LicenceFees LEC LHDA

4. Trade&OtherReceivables LEC – Customers’ & Electrification Levies Trade & Other Receivables

5. AssetsHeldforSale Motor Vehicle due for disposal

2012M

2,846,929

2,354,230559,900

2,914,130

4,277,1541,551,783

5,828,937

-

2013M

4,190,271

2,706,938594,614

3,301,552

4,554,1622,167,565

6,721,727

220,000


6. Trade&OtherPayables

Fallingduewithin1Year Gratuity * Retention Fee - Universal Access Fund Trade & Other Payables

Fallingdueafter1Year Gratuity

2012M

398,052852,919277,898

1,528,869

2,111,5873,640,456

2013M

707,969251,089404,637

1,363,695

4,114,7105,478,405

*Retention fee refers to amount held by the Authority on completion of electrification projects for latent defects for a period of a year.




Cost/RevaluationAt April 1,2012AdditionsAdjustments RevaluationAtMarch31,2013

DEPRECIATION

At April 1, 2012Charge for the yearAdjustments

AtMarch31,2013

CARRYINGVALUEAt April 1, 2012

AtMarch31,2013

ITEquipment

M

2,640,205313,150

(752,577)-

2,200,778

33.33%

1,316,221696,267

(723,843)

1,288,645

1,323,984

910,280

OfficeEquipment

M

84,520-

(71,547)51,55264,525

25%

40,78921,131

(61,920)

-

43,731

64,525

OfficeFurniture

M

340,79224,644(6,497)

358,939

20%

69,12071,033(3,040)

137,113

271,672

221,826

OfficeFittings

M

149,503-

(149,503)--

20%

44,01129,791

(73,802)

-

105,492

-

MotorVehicles

M

1,031,046751,424

(869,259)154,929

1,068,140

25%

232,328309,300

(541,628)

-

798,718

1,068,140

FreeholdRefurbishment

M

170,441221,693

(177,191)-

214,943

33.33%

81,73258,004

(139,736)

-

88,709

214,943


7. Property,PlantandEquipment

Totals

M

4,416,5071,310,911

(2,026,574)206,481

3,907,328

1,784,2011,185,526

(1,543,969)

1,425,758

2,632,306

2,481,567

All assets were revalued on the 31 March 2013 in compliance with IAS 16 to reflect their fair values.

Balance at the beginning of the yearIncrease during the yearAmortised during the yearBalanceattheendoftheyear

2012M

1,513,430-

(508,710)1,004,720

2013M

1,004,720-

(502,355)502,365

8. CapitalGrants

Petty CashShort-Term Deposits – (NedBank)Short-Term Deposits – (StanLib)

Current Accounts – UAFShort-Term Deposits – UAF (StanLib)

Bank overdraft - (Nedbank)Total

2012M

2,500 1,065,565 3,012,751

4,080,816

829,500 9,012,548

13,922,864(428,979)

13,493,885

2013M

2,500 2,159,422 2,572,514

4,734,436

53,169 27,212,62432,000,229

(525,503)31,474,726

9. CashandcashequivalentsCash and cash equivalents are measured at fair price and consists of:


10. BankOverdraft

The overdraft represents cheques issued but not yet presented for payment at year end , which would otherwise be met by automatic draw downs from call account.

11. UniversalAccessFund(UAF)-Receipts&Payments

ReceiptsLevies Collection Finance Income (i)TOTALExpenditureElectrification ProjectsBank ChargesTOTAL

MovementinUAF–FortheyearUniversal Access Fund –B/FUniversalAccessFundBalance(ii)

2012M

7,533,3551,211,981

18,745,336

40,063,8876,839

40,070,726

(21,325,390) 32,677,462

11,352,072

2013M

18,728,538708,407

19,436,945

1,553,6112,626

1,556,237

17,880,70811,352,072

29,232,780

11.1 UNIVERSALACCESSFUNDThe Fund was established pursuant to LEA Act 2002. The main objective of the Fund is to facilitate expansion of electricity services where they are non-existent. The Fund is administered pursuant to UAF Rules of 2011. It receives monies from electricity users, through payment of rural electrification levies. The Authority determines the levies and approves all the projects to be funded by the UAF, including annual budget for the Fund.





11.2 Receipts

(i) Finance income - Represents interest realized on investment account.(ii) Universal Access Fund Balance – A budget of M30,280,000 had been approved for electrification projects for the next financial year



VillagesName/Projects

Ha - Leteba

Koro Koro Ha Mofoka

Ha Belo

Ha Mojaki

Ha Rafolatsane

Hololo

TOTALS

Balb/fMar2011

M

-

-

-

-

1,815,611

-

1,815,611

ApproveConstracts

1,406,238

3,889,813

5,568,163

2,156,383

5,023,204

4,552,225

Balance

M

-

-

-

-

251,089

-

251,089

251,089

PaymentsProject

M

-

-

-

-

1,302,522

-

1,302,522

RetentionFeePaid

M

50,118

186,368

262,401

106,053

-

227,395

832,335

Totals

M

50,118

186,368

262,401

-

1,302,522

-

2,134,857

14. UniversalAccessFund(UAF)ProjectsfortheYearEnded31March2013

Savings

-

8,549

12,207

-

262,000

-

282,586

NameofContractor

Lesehe

Jimmy Electronics

Moramo Civils

LR Construction

Lesehe Cons.

Jimmy Elecronics

Retention

50,118

194,917

274,438

106,053

251,089

227,395

1,104,010

CommittedFunds

Balance at the beginning of the yearIncrease during the yearAmortised during the yearBalanceattheendoftheyear

2012M

548,010-

(223,095)324,915

2013M

324,915206,484

(225,069)306,330

13. RevaluationReserve

12. RetainedSurplus/(Deficit)

Income

Expenditure

OperatingSurplus(Deficit)

Loss on disposal

Total Other Income

Surplus/(Deficit)fortheyear

Revaluation Reserve Amortisation

Surplus B/F

RetainedSurplus/(Deficit)

2012

60,097,331

59,534,217

563,114

103,567

666,681

223,095

4,743,190

5,632,966

2013

23,539,644

23,945,879

(406,235)

(17,456)

168,865

(254,826)

-

5,632,966

5,378,140

44 45FINANCIAL STATEMENTS - 2012/13 FINANCIAL STATEMENTS - 2012/13





INCOME:Customers’ LevyLicence feesGoL & World Bank GrantsCapital Grants Release

Universal Access FundOtherIncomeFinance IncomeGain/(Loss) Assets Sale

TotalIncome

Less:ExpenditureDirectors’Expenses:Director’s FeesOther Costs – BoardBoard Training

StaffCosts:Staff Remuneration & BenefitsStaff Wellness ActivitiesGratuityStaff Training/WorkshopsHealth & Wellness allowanceStaff Uniform

OperatingCosts:StationeryAdvertisingPublic AwarenessPublicationsAdcocacyStakeholders ConsultationEnergy Planning W/shopExpansion of Electricity NetworkLEA LiteratureInternational Technical StandardsConsumables assets below M1,500Farewell CostsESAWAS subscriptionPublic Relations

2012M

13,763,6752,914,1302,846,929

508,71020,033,44440,063,887

116,546-

116,54660,213,877

551,538284,764475,739

1,312,041

8,308,567-

2,321,982534,819

20,16845,000

11,230,535

183,45896,558

107,465--

24,610---

5,58019,60931,959

-2,095

15.DetailedStatementofComprehensiveIncome



Office ExpensesTransport CostsBank ChargesRentElectricityTelephoneInternetCorporate Social ResponsibilityRisk ConsultantInsuranceIT ExpensesRERA SubscriptionRERA Meetings & W/shopsAFUR Meetings & W/shopsInternational Meetings & W/shopsAFUR SubscriptionDevelopment of bylawsHuman Resource ConsultantAnnual ReportInspection CostsPromotional ItemsEconomic & Financial Regulatory ModelIncreasing Access to ElectricityNational Security of SupplyPublic HearingUniversal Access fundMonitoring ComplianceCustomer EducationCustomer WorkshopsAfrican Peer ReviewWater & Cleaning Services – Maseru WestSecurity

WaterRegulationExpensesBoard, Staff and Stakeholders Study toursWater Regulatory Instruments ConsultancyOther Water Regulation Expenses

Othercosts:Audit FeesDepreciationFinance costsOperating&OtherCosts

TotalExpenses

2011M

153,426235,615

33,797615,325

43,852176,093

72,00067,42189,87597,64695,971

216,148240,201208,766485,062

55,72546,65622,750

36,15323,098

104,057 9,801

72,521 5,175

17,586 40,063,887

20,65012,515

9,6437,948

57,5749,097

350,2171,436,467

280,105

22,5001,025,434

12,97947,004,620

59,547,196

2013M

172,270216,965

39,242661,325

62,938135,477

72,00095,53242,20085,487

101,275251,539

432,69052,729

553,99861,255

- 24,000

37,1538,485

166,574 170,946

8,096 -

60,010 1,556,237

-28,814

7,42361,75054,90110,007

-

3,071,954 19,275

23,152

1,185,526-

10,254,965

25,502,116

15.DetailedstatementofcomprehensiveIncomecontinued

2013M

15,545,4663,301,5524,190,271

502,35523,539,644

1,556,237

877,272(17,456)859,816

25,955,697

426,154134,243301,386

861,783

10,752,603 5,8722,792,022

788,002 20,465

26,40414,385,368

135,26658,320

226,18710,04332,123

6,494108,637

11,11540,17928,493

4,148-

62,735-

Lesotho Electricity Authority ANNUAL REPORT

NOTE/COMMENT - 2012/1348

Page Note/Comment

© Lesotho Electricity Authority 2013

Lesotho Electricity Authority, 6 Floor, Moposo House, Kingsway, Maseru, Lesotho

Tel: +266 22 312479 Fax: +266 22 315094

Email: [email protected] Website: wwww.lea.org.ls

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