

Latest News

Useful links
Lesotho Electricity Authority Act (No. 12 of 2002): This Act establishes the Lesotho Electricity Authority and defines its functions and powers for its administration and internal organization Lesotho Electricity and Water Authority (LEWA) Ministry of Energy and Meteorology Lesotho Highlands Development Authority Lesotho Electricity Company Southern African Power Pool For more, see Resource Center- Key energy indicators (2000-2018)
- Macroeconomic indicators
- Business environment and private sector development
- Key takeaways on the electricity sector
Key energy indicators (2000-2018)
|
|
|
|
|
|
Macroeconomic indicators1
The economy showed signs of recovery in 2017/18, with real GDP growth estimated at 0.9% following a 2.3% contraction in 2016/17. Growth was constrained by the slow recovery of South Africa’s economy and a 27% decline in receipts from the Southern African Customs Union (SACU) in 2016/17, which have not yet fully recovered.
The fiscal deficit improved to an estimated 3.7% in 2017/18 from 4.0% in 2016/17, due to fiscal consolidation. Recurring fiscal deficits largely reflect declining SACU revenue (which constitutes 50% of Lesotho’s total revenue) and a huge wage bill (about 24% of GDP— three times the Sub-Saharan average) that crowds out capital spending and spending on goods and services.
To diversify revenue sources, the government has introduced a simplified tax regime and simplified procedures for small taxpayers. With external debt estimated at 39.3% of GDP in 2018, Lesotho has a moderate risk of debt distress. Lesotho maintains parity between its currency, the loti, and the South African rand. Since July 2018, the central bank policy rate has been set at 6.5%, compared with 7% in the second half of 2017. Inflation has fallen from its peak of 6.8% in 2015/16 to an estimated 4.8% in 2017/18, despite high energy prices.
The current account deficit reached an estimated 2.8% in 2017/18, down from 6.5% in 2016/17, owing mostly to increased diamond exports in response to favorable international prices. The government’s international reserves currently cover almost 3.1 months of imports.
1 Source: African Economic Outlook (AEO) 2019
Business environment and private sector development2
Lesotho continues to rank low in important indicators of private sector development. The Government acknowledges that an uncompetitive business environment is one of the most binding constraints to private sector development. Competitiveness rankings and other investment climate diagnostics indicate that there are persistent major constraints to private sector growth. These challenges include inadequate infrastructure, cumbersome business procedures, poor customs administration, insufficient access of small and medium-sized enterprises to finance, high energy costs, lack of equitable and effective regulation and enforcement, lack of capacity in government to implement reforms, as well as skills gaps in certain economic sectors. Lesotho’s ease of doing business is ranked 122 out of 190 countries in the 2020 World Bank Doing Business Report (from 106 in 2018)3 .
The authorities remain committed to improve the business climate and to support private sector-led growth and economic diversification. Recent structural reforms undertaken by the authorities include the enactment of the new Companies Act 2011 in June 2012, the implementation of a new business plan for the One-Stop Business Facilitation Center, and the finalization of the Industrial Licensing Bill. These and other reforms are important for investment and job creation. However, the skills shortage is still a serious problem. Investment in skills development should continue to receive high priority. Labor productivity remains an integral driver of Lesotho’s long-term growth and will grow in importance as the economy diversifies and moves up the agricultural, manufacturing, mining, and service sectors value chains.
Box 1 Headwinds and tailwinds
Real GDP is projected to grow by 0.9% in 2018/19 and 1.2% in 2019/20, supported largely by increased diamond exports and a strong rebound in construction of the Lesotho Highland Water Project Phase II. Growth will also benefit from emerging opportunities for the textile and clothing industry created by the South African market.
Government structural reforms include a subsidy for agricultural mechanization and a program that facilitates rehabilitating irrigation schemes, controlling the spread of livestock diseases, constructing greenhouses and shade nets, and constructing woolsheds to boost wool and mohair production. Lesotho is also integrating climate change into agricultural policies and strategies.
The initiatives are consistent with the “Feed Africa” and “Improve the Quality of Life for the People of Africa” priorities among the African Development Bank’s High 5s. For “Industrialize Africa,” another of the High 5s, the government is constructing a geoscience laboratory to facilitate diversification of the mineral industry. In parallel, the government introduced a strategy to increase access to financial services in the rural areas. A public–private dialogue platform was launched for tourism, manufacturing, and commercial agriculture to accelerate job creation and poverty reduction. Finally, the government is empowering small and medium enterprises by establishing cooperatives.
The business and investment climate faces political uncertainties due to a fragile coalition government. Slow recovery of the South African economy threatens Lesotho’s worker remittances and SACU revenues.
2Source: AfDB Country Strategy Paper for Mali 2013-2017
Key takeaways on the electricity sector
Electricity access
Lesotho’s total population access to electricity reached 43,1% in 2017. In urban areas, the access rate is about 87,2%. The rural area's level of access is still low at 11,7% in 2017, although increasing since 2013 (<1%). See the table below.
Population Access to Electricity, 2013-2017
|
Population’s access to electricity (%) |
||
National |
Urban |
Rural |
|
2013 |
26,4 |
60,7 |
14,4 |
2014 |
27,8 |
61,5 |
15,6 |
2015 |
30,0 |
63,0 |
17,8 |
2016 |
31,9 |
66,3 |
18,9 |
2017 |
33,7 |
69,6 |
20,0 |
Source: WB Tracking SDG7
Installed capacity
Installed generation capacity was recorded at 75.7 MW in 2018, of which Hydro generation accounts for 98.9%, Diesel for 1.1%, and Solar for 0.7%. The following table shows the breakdown of the generation capacity per technology and related power stations.
Installed Generation Capacity in 2018 (in MW)
Technology type |
Power station |
Installed Capacity (MW) |
Diesel |
Mini diesel generator of Semonkong |
0.5 |
|
|
Total 0.5 |
Hydro |
Muela’s hydroelectric power station |
72 |
|
Mini hydro-power stations of Mantsonyane |
2 |
|
Mini hydro-power stations of Semonkong |
0.8 |
|
|
Total 74.8 |
Solar |
Solar PV (incl. Moshoeshoe I, Roma, etc.) |
0.4 |
|
|
Total 0.4 |
All types |
All stations |
Grand Total 75.7 |
Source: IRENA, BOS, and various sources
Production
The evolution of electricity generation (in GWh) over the period 2013-2017 is shown in the table below.
Evolution of Electricity Generation, 2011-2018 (GWh)
Year |
Total |
Hydro |
Solar |
2011 |
565,9 |
565,9 |
0,0 |
2012 |
280,4 |
280,3 |
0,1 |
2013 |
520,2 |
520,1 |
0,1 |
2014 |
385,0 |
385,0 |
0,0 |
2015 |
402,0 |
402,0 |
0,0 |
2016 |
419,6 |
419,6 |
0,0 |
2017 |
438,0 |
437,9 |
0,1 |
2018 |
457,1 |
457,1 |
0,0 |
Source: AFREC Database
Production costs
The long-run marginal cost of supply, which is the level of electricity price that ensures the utility company can meet its production costs in the long term, is estimated at 1.473 M/kWh, i.e., USD cents 11 per kWh4.
Maintenance5
Over the past years, more than 80% of planned maintenance was completed by LEC. In 2019, LEC performed maintenance of the Muela Hydro Power Station system that required the shut-down of the provision of electricity from the station. As Muela station provides more than 95% of the country’s electricity generation, the shutdown of the electricity supply was scheduled in close tandem with ESKOM to ensure a normal provision of electricity. The Muela system maintenance lasted about two months, characterized by minimum load-shedding management to keep the demand within the capacity determined by ESKOM.
Downtime and efficiency6
During the fiscal period 2016/2017, the number of network faults experienced on the transmission systems and their restoration is illustrated on the following table.
Month |
Total nb. of outages |
Nb. of outages restored within 4 Hours |
Nb. of outages restored within 24 Hours |
Nb. Of outages restored beyond 24 Hours |
April 2016 |
25 |
20 |
5 |
0 |
May 2016 |
27 |
23 |
4 |
0 |
June 2016 |
20 |
14 |
6 |
0 |
July 2016 |
48 |
34 |
14 |
0 |
Aug 2016 |
30 |
21 |
9 |
0 |
Sept 2016 |
33 |
29 |
4 |
0 |
Oct 2016 |
28 |
25 |
3 |
0 |
Nov 2016 |
53 |
50 |
3 |
0 |
Dec 2016 |
9 |
9 |
0 |
0 |
Jan 2017 |
59 |
56 |
3 |
0 |
Feb 2017 |
53 |
48 |
5 |
0 |
Mar 2017 |
30 |
26 |
4 |
0 |
Annual totals |
415 |
355 |
60 |
0 |
Source: LEC Annual Report 2016/2017
The above table shows that 85.5% of all outages were restored within four hours, while only 14.5% of outages were restored within 24 hours. No outages were restored beyond 24 hours.
On average, the system losses improved from 13.2% to 12.9% between 2016 and 2017. The trend was attributed to the implementation of a robust revenue protection strides including but not limited to: spot-checks targeted inspections to areas where pilfering is suspected and in-depth analysis of the consumption data.
Tariffs
The following table shows LEC approved electricity charges for 2016/2017.
Approved LEC Energy charge (including levies) by type of consumer, 2016/2017 (M/kWh)
Industrial HV |
Industrial LV |
Commercial HV |
Commercial LV |
General Purpose |
Domestic |
Street Lighting |
0.2155 |
0.2326 |
0.2155 |
0.2326 |
1.3753 |
1.2249 |
0.7260 |
Source: LEC Annual Report 2016/2017
4Source: Lesotho Electricity Supply Cost of Service Study
5Source: LEC
6Source: LEC Annual Report 2016/2017
- Country strategy on the energy sector
- Country strategy on the environment and climate change
- Regional integration with the Southern African Power Pool (SAPP)
Country strategy on the energy sector
National energy policy
Lesotho’s 2015-2025 National Energy Policy was adopted in 2016 with the following vision: “Energy shall be universally accessible and affordable in a sustainable manner, with a minimal negative impact on the environment.” Its objectives are to (i) contribute to the improvement of livelihoods, economic growth, and investment; (ii) ensure the security of supply; and (iii) contribute to the protection of the environment. The energy policy will implement the following principles:
- Integrating energy into national and sectoral planning is a crucial catalyst for energy effective utilization to improve the livelihoods of the people of Lesotho as well as driving economic growth;
- Effective coordination of the energy sector is expected to bring a wide spectrum of stakeholders, including vulnerable groups, to share experiences and plan together for better integration of energy into relevant programs;
- Empowerment of broader stakeholders on energy issues to bring them on board for informed participation will be executed through awareness-raising, education, and training;
- Public-Private Partnerships are viewed as playing a central role in energy project development especially they are an important platform for engagement of the private sector and cooperative associations in building the economy of Lesotho;
- Stakeholder involvement will be a prerequisite step towards developing a national energy policy;
- Environmental Sustainability framework will guide the programs and activities of the energy sector; and
- Gender equality will be an integral part of energy programs and activities implemented.
Use of renewable energy7
- Hydroelectric and pumped storage potential: Lesotho has a very high hydroelectricity potential, which has been assessed at over 22 sites with an estimated total potential of over 14 000 MW. This potential is categorized by four large‐hydro sites (313 MW, and over 1500 GWh/annum) and 18 small‐hydro potentials with a total of almost 13 900 MW. Also, Lesotho has pumped storage potential of over 4000 MW made up of 1000 MW at Monotsa on the Pitseng River and at least 1000 MW at four other sites, and 2400 MW at the LHWP Phase 2 at Katse Dam. To date, the 72 MW Muela Hydro Power Station, which was commissioned in 1998 by the LHWP, is the only commercial large‐hydro power installation in Lesotho.
- Solar Potential: Lesotho has a high solar energy potential with some of the highest annual solar radiation globally. The mean annual daily solar radiation of Lesotho is estimated at 5.4 kWh (19.44 MJ) per square meter, showing great potential for solar water heating, solar photovoltaic, and crop drying. The National University of Lesotho (NUL) is working on generating solar irradiation data for assessing key performance indices and characterizing solar PV systems for rural areas. Solar PV contribution to the energy mix is currently less than 1%, and there are no grid-connected solar PV projects yet.
- Wind Potential: Lesotho is one of the top four Southern African countries with good wind potential. Although the total wind potential is still to be evaluated, wind speeds average 3.5m/s with maximums as much as 25m/s. Wind regimes have been characterized by three sites (Letseng‐la‐Terai, Sani, and Masitise) at heights of 30 – 50 meters above the ground. The objective is to erect wind farms at the sites for power generation. Wind profile studies to produce a national wind map are also on-going.
As part of the promotion of renewable energy, the government of Lesotho adopted in 2013 a National Renewable Energy Policy. It is intended to: (i) enhance the energy security of Lesotho by reducing reliance on fossil fuels and imported electricity; (ii) increase the access to modern energy for rural and decentralized areas of Lesotho; and (iii) ensure protection of the environment through reduction of Greenhouse Gas (GHG) emissions from energy sector in Lesotho as well as prevent other related environmental damages.
7Source: SE4All rapid assessment gap analysis
8The Lesotho Highlands Water Project (LHWP) is an ongoing water supply project with a hydropower component, developed in partnership between the governments of Lesotho and South Africa. It comprises a system of several large dams and tunnels throughout Lesotho and delivers water to the Vaal River System in South Africa. In Lesotho, it involves the rivers Malibamatso, Matsoku, Senqunyane, and Senqu. It is Africa's largest water transfer scheme - Wikipedia.
Country strategy on the environment and climate change
Policy and regulation
The government is developing its second National Strategic Development Plan for the period 2019-2023 (NSDP II). NSDP II mainstreams Climate Change, Environment, Gender, and Social Inclusion across all sectors. These are crucial for the realization of inclusive growth. Climate change has implications for employment creation and economic growth since its impact on various economic sectors such as agriculture, health and nutrition, tourism, and natural resources has been well established. Therefore, the NSDP II strategy for employment creation and growth will take cognizance of climate change mitigation and adaptation.
Environment
The Constitution of Lesotho provides the mandate on environmental management. Section 36 of the constitution allows for the adoption of policies designed to protect and enhance the natural and cultural environment of Lesotho for the benefit of both present and future generations. It also facilitates endeavors to assure all citizens a sound and safe environment adequate for their health and well-being. To this extent, the government of Lesotho formulated the National Environmental Action Plan (NEAP) in 1989. The NEAP provides a framework for the integration of environmental considerations into the planning and decision-making process for social and economic development.
Climate change
The Ministry of Natural Resource, through its Meteorological services, developed a Policy Formulation on the Transfer of Science and Technology for Adaptation to Climate Change in 2004. The policy on science and technology encompasses the following core elements: (i) the promotion of a science and technology culture, infrastructure and links; (ii) the facilitation of access to up-to-date, reliable, and cost-effective science and technology; (iii) the full exploitation of the country’s natural and human resources and science and technology investments; (iv) the equitable distribution of science and technology benefits; and (v) the promotion of standards and mutual respect for intellectual property, including indigenous knowledge systems.
Regional integration with the Southern African Power Pool (SAPP)
2018 Highlights
Lesotho is an active member of the SAPP regional market through Lesotho Electricity Company (LEC) as an operating member. The following table shows the SAPP utility generation mix for the year 2018.

Integration challenges
Reduction in load-shedding - This year (2018), the aggregate peak demand for SAPP Operating Members (excluding non-operating members) was 47,495 MW against an operating or available capacity of 57,045 MW. This peak demand is a simple summation of peak demands of individual member power systems usually occurring at different times. The peak demand excludes loads that were curtailed or reduced mainly due to generation capacity constraints and, in isolated cases, due to insufficient transmission capacity. Compared with the previous year, the peak demand rose by 3,993 MW. It was attributed partly to the commissioning of a new generation, especially in South Africa and Zambia, and partly to improved hydrology in the Zambezi catchment area, which resulted in a considerable reduction of load-shedding in the region.
Updating of the SAPP Methodology for Handling Energy Interchange Imbalances - The SAPP implemented the power-frequency-based methodology for handling energy interchange imbalances in the year 2010. Over the years, some issues that were not pertinent at the very beginning cropped up. These included: (i) imbalances caused by tripping of generation on over-frequency protection in one area following a disturbance in another area; and (ii) interruption of scheduled interchange mid-way in an hour or several minutes from the top of the hour, having already delivered some energy. Therefore, on 24 April 2017, the SAPP Markets Sub-Committee (MSC) and the Operating Sub-Committee (OSC) met jointly in Johannesburg, South Africa, and resolved cross-cutting issues on the handling of inter-Control Area energy imbalances. The joint meeting also developed a procedure for handling intra-Control Area energy imbalance within a Control Area. The developed procedure would apply where there are no bilateral arrangements for handling intra-Control Area energy imbalance between SAPP members.
Quality of Power Supply - Power quality issues are becoming more prominent to regulators, power utilities, and customers. A few years ago, the OSC formed a working group on power quality. The working group developed a SAPP standard for power quality as well as a specification for a SAPP power quality meter. By the end of the period under review, power quality meters were installed on almost all interconnectors in SAPP. Monitoring and measurement of power quality were being done. ZESCO, Eskom, SEC, EDM, NamPower, CEC, HCB, and BPC also installed central online databases for power quality. SAPP members agreed to focus on the identification of common power quality problems and associated mitigation measures.
Clashing imperatives
Some of the SAPP member countries have outlined their emissions targets and initiatives they will be putting in place to adapt to the impacts of climate change, including the required means of implementation. However, the SAPP is committed to continuing development in a sustainable manner that results in a benefit to the economy, society, and the environment. The SAPP's approach is to contribute to global efforts to combat climate change while ensuring the sustainability of the region's economies. Climate change efforts specific to SAPP activities are coordinated by the SAPP Environmental Sub-Committee, subject to oversight by the SAPP Management Committee.
Network integration
Currently, the SADC region is not fully integrated as Angola, Malawi, and the United Republic of Tanzania are not connected to the regional power grid. Approved by SADC leaders at their 32nd Ordinary Summit held in August 2012 in Mozambique, the Energy Sector Plan of the Regional Infrastructure Development Master Plan (RIDMP), covering the period 2012 to 2027, is an ambitious program to develop cross-border infrastructure in the region. Some of the planned transmission lines are the Zimbabwe-Zambia-Botswana-Namibia (ZiZaBoNa) interconnector project, the Malawi-Mozambique interconnector project, the Mozambique-Zimbabwe-South Africa (MoZiSa) transmission project and the Zambia-Tanzania-Kenya interconnector project. Most of the SADC regional interconnection projects that are under consideration by the AfDB are contained in the RIDMP.
The following table indicates the chronology of the existing power network in the region.
Chronology of regional power network integration in Southern Africa
Year |
Interconnexion line construction |
Event |
Countries interconnected |
1956 |
1x220kV AC |
220kV line constructed between Northern Rhodesia and Katanga province in Congo. |
DRC, Zambia |
1960 |
2x330kV AC |
2x330kV grid construction to connect Northern & Southern Rhodesia |
Zambia, Zimbabwe |
1975 |
533kV HVDC |
533kV line between Cahora Bassa and Apolo |
Mozambique, South Africa |
1996 |
400kV |
400kV line constructed between Matimba and Insukamini |
South Africa, Zimbabwe |
1997 |
400kV |
400kV line constructed between Matimba and Phokoje |
South Africa, Botswana |
1997 |
330kV |
The 330kV Mozambique-Zimbabwe interconnector |
Mozambique, Zimbabwe |
2000 |
400kV |
400kV line between Camden via Edwaleni to Maputo |
South Africa, Swaziland, Mozambique |
2001 |
400kV |
400kV line between Arnot and Maputo |
South Africa, Mozambique |
2001 |
400kV |
400kV line between Aggeneis and Kookerboom. |
South Africa, Namibia |
2006 |
220kV |
220kV line between Livingstone and Katima Mulilo |
Zambia, Namibia |
Source: SAPP and various sources
Regional electricity market9
Traditionally, SAPP utility members are mainly trading electricity (about 90-95% of energy trade) through fixed co-operative bilateral contracts. In April 2001, the SAPP introduced the short-term energy market (STEM) as a precursor to a fully competitive market. The STEM was designed to allow for the trading of electricity on a shorter timeframe between SAPP members (in addition to bilateral contracts). The development of the competitive electricity market started in January 2004 when an Agreement between the Government of Norway and SAPP provided SAPP with a grant to the amount of NOK 35 million for this purpose. Under this Agreement, NordPool developed the ‘Day-Ahead Market’ (DAM) trading platform for the SAPP. The goals of the SAPP DAM are to (i) establish an efficient & competitive marketplace, and (ii) ensure that consumers benefit from the market. The SAPP DAM replaced the STEM market in 2009 and operated as a firm energy market that trades (via double-sided auction process) hourly energy contracts for the following day inclusive of existing bilateral contracts (cleared first), transmission capacity constraints, and wheeling fees. Since December 2015, the SAPP market architecture was updated with several new sub-markets established. The sub-markets included in this new SAPP market architecture are:
• Bilateral contracts: To meet long-term energy supply-demand balance between market participants. This sub-market pre-dates the establishment of the SAPP and has been the legacy sub-market within which most electricity trading in the SAPP occurs.
• Forward Physical Market Monthly (FPM-M): A sub-market where market participants can trade either an Off-Peak product for a single month (same volume and price in Off-Peak hours for the month) or a Non-Off-Peak product for a single month (same volume and price in Non-Off-Peak hours of the month). It is a sub-market that acts as a bridge between bilateral contracts and the FPM-W (outlined next) and has been operational since April 2016.
• Forward Physical Market Weekly (FPM-W): It is a sub-market where market participants can trade Off-Peak, Standard, and Peak products for a particular week (with the same volume and price for all Off-Peak, Standard and Peak hours of the week respectively). It is a sub-market that acts as a bridge between the FPM-M and Day-Ahead Market (DAM) and has been operational since April 2016.
• Day-Ahead Market (DAM): An open and competitive sub-market traded on a day-ahead basis (can forward bid up to 10 days if desired) to meet short-term supply-demand balances between SAPP market participants.
• Intra Day Market (IDM): It is a sub-market that allows market participants to trade up to one hour before delivery. The IDM matches market participants automatically on a first-come-first-serve basis if a seller’s offer price is less than a buyer’s bid price and a seller’s volume is lower (or equal to) a buyer’s volume.
Between April 2016 and January 2017, the SAPP market revenues amounted to USD 69 million, with the following market share: DAM (74%), FPM-W (11%), FPM-M (8%), and IDM (7%). The SAPP market average prices were as follows: Off-Peak (3-6 USDc/kWh), Standard (4-10 USDc/kWh), and Peak (10-14 USDc/kWh).
9Source: SAPP and various sources
- Key stakeholders in the power market
- Mapping of current stakeholders across agreements
- Electricity Regulatory Index
- National utility
- Mapping of ongoing power programs and projects
- Investment opportunities for the private sector
- Contact information of local donor representations
Key stakeholders in the power market
Institutional framework10
The Ministry of Energy and Meteorology, through the Department of Energy, is responsible for the overall vision, policy direction, administration and coordination of the energy sector in Lesotho. The national institutions accountable for the power sector are the Department of Energy, Lesotho Electricity Company (LEC), Lesotho Electricity Authority (LEA), Lesotho Electrification Unit (LEU), National Rural Electrification Fund (NREF) and Lesotho Electricity Generation Authority (LEGA).
The power sector is divided into institutions responsible for Power Generation, Transmission, Distribution, supply, and Regulation. The Lesotho Electricity Authority (LEA) is responsible for regulating the sector by issuing licenses and setting the electricity tariffs. Electricity generation has been mandated to the Lesotho Electricity Generation Authority (LEGA). The development of transmission, distribution, and supply infrastructure is done by the Lesotho Electrification Unit (LEU), which also manages the National Rural Electrification Fund (NREF). The Lesotho Electricity Company (LEC) is responsible for the management of the transmission, distribution, and supply infrastructure.
Key stakeholders in the electricity sector11
The following table shows the key electricity sector institutions in the power sector:
Institutions |
Roles |
Department of Energy (DoE) |
Policy, Plans, Strategy, Programs formulation, enforcement, and information dissemination. |
Lesotho Electricity Authority (LEA) (established through Act 2002) and now Lesotho Electricity and Water Authority (LEWA) (through Amendment of Act 2002 in 2011) |
Regulation of the sector by issuing licenses for electricity supply activities and setting the electricity tariffs for the generation (including feed-in tariffs), transmission, distribution, and supply; regulating the quality of supply, and resolving disputes. |
Lesotho Electricity Generation Authority (LEGA) (through Lesotho Electricity Authority (Application for Licenses) rules, 2012) |
Development and management of electricity generation projects to supply Lesotho and the region with electricity. |
Lesotho Electricity Company (LEC) (established through the Electricity Act N°7 of 1969) |
Electricity generation, transmission, distribution, and supply in urban and financially viable areas of the country. |
Lesotho Electrification Unit (LEU) |
Build operate and Transfer of electricity transmission, distribution and supply network and management of NREF. |
Authority (LHDA) (established by order N° 23 of 1986) |
The LHDA is responsible for the implementation, operation, and maintenance of Lesotho’s portion of the Lesotho Highlands Water Project (LHWP), a water (jointly with South Africa), and hydropower generation (Lesotho only) project. |
Rural Electrification Unit (REU) |
Project implementation unit under the DoE that coordinates and manages the implementation of off-grid and rural electrification projects outside the LEC service area. |
No Independent Power Producers (IPPs) are operating in Lesotho, but the government is in the process of procuring a 20 MW solar park. When the DoE has completed negotiations with its preferred bidder, a PPA will be established to finance the construction and deployment of the solar park. However, there are some private companies with an interest in becoming independent power producers.
The Government's plan to attract private sector microgrid developers is to implement a system of area-based concessions. The Electricity Masterplan will identify which areas will be tendered for microgrid concessions. The DoE and REU will run the tenders per the tender rules specified in the RE regulatory framework. A draft set of tender rules, licensing procedures, technical standards, an off-taker PPA, and an implementation agreement have already been developed as part of LEWA’s RE regulatory framework. Private developers will bid own and operate microgrids in specified areas and sell service directly to rural customers, just like a typical distribution company. Consumers would pay the same price paid by customers of LEC, with the gap in recovery being covered through a levy charged to all electricity customers.
10Source: SE4All Rapid assessment and Gap Analysis for Lesotho
11Source: SREP Investment Plan for Lesotho
Mapping of current stakeholders across agreements
Type of agreement/ Financing and delivery mechanism |
Beneficiary |
Entity type |
Technology |
Current capacity |
State-owned Company |
LEC |
Public Utility |
Hydro, Diesel |
75.3 MW |
Power purchase agreement (post-pay for utility-scale projects)/ Pay-as-you-go and payment plan for connection (prepayment for microgrids) |
One Power Africa |
Private Renewable energy vendor/IPP potential |
Solar Microgrids, Utility-scale Solar |
N.A. |
Upfront payment |
Monsun Clean Energy Technologies |
Private RE vendor/IPP potential |
Solar PV, Solar SHS, SWH, Utility-scale solar |
N.A. |
N.A. |
Venus Dawn Technologies |
RE vendor |
Solar geysers, solar PV, solar street lights |
N.A. |
Source: SREP Investment Plan for Lesotho, N.A. Information not available
Electricity Regulatory Index
Regulatory Assessment
The Electricity Regulatory Index for Africa (ERI) is a flagship publication of the Power, Energy, Climate Change and Green Growth Complex of the African Development Bank, which seeks to empirically evaluate the performance of African utility regulators, benchmark their performance against international best practices as well as a peer-to-peer comparison of their performance. Lesotho participated in the ERI surveys 2018 and 2019. Over 34 participating countries in the 2019 survey, Lesotho ranked 24th with an overall score of 0.513, which denotes that some elements for a supportive regulatory framework are established, although with weaknesses that do not permit the regulator to have the substantial capacity, legal and institutional structures. The overall score of Lesotho in 2018 was 0.481.
The 2019 results are displayed in the table below:
Sub-Index |
Score |
Regulatory Governance |
0.854 |
Regulatory Substance |
0.432 |
Regulatory Outcome |
0.409 |
ERI Score |
0.513 |
ERI 2019 insights
- Regulatory governance: Lesotho’s high score denotes that many elements of a supportive regulatory framework are in place, despite some weaknesses in legal and institutional structures. Lesotho’s scores on sub-indicators like independence from Government and Stakeholders are below the average of the sample study. Independence of the regulator is an area that needs improvement in Lesotho.
- Regulatory substance: The score indicates a medium level of the regulatory development characterized by implementation constraints, institutional gaps, and low capacity. Lesotho’s economic regulation sub-indicators are below the average score of the sample study. One of the areas of improvement is the development of capacity on the implementation of tariff-setting guidelines.
- Regulatory outcome: On the regulatory outcome sub-index, Lesotho's low score is due to two main sub-indicators: (i) the sub-indicator related to the promotion of electrification; and (ii) the sub-indicator measuring the ability of the utility to deliver on the technical and commercial quality of electricity supplied to end-users, which is considered reflective of the regulator’s capacity to enforce sound regulation over the sector.>
The first edition (2018) of the study is available here and the 2019 version
The ERI 2019 regulatory index

National utility
General profile12
The Lesotho Electricity Company (LEC) is a 100 percent government-owned entity established under the Electricity Act 7 of 1969 to supply environmentally friendly electricity to the people of Lesotho. Before LEC coming to fruition, electricity provision in the country was under the control of the Government of Lesotho. A small coal-fired generating plant provided the service mentioned above, used to supply a limited number of domestic customers located within the Maseru West and Old Europa areas.
In the present day, LEC maintains three bilateral bulk supply agreements with LHDA, ESKOM of South Africa, and Electricidade de Moçambique (EDM) for its bulk electricity supply. LEC is primarily an electricity transmission and distribution operator, although it has its own small generation facilities: the 180 kW Semonkong hydropower plant (with 500kW diesel generator), and the 2 MW Mantsonyane hydro plant.
Policy and strategy13
LEC’s vision is to “be a benchmark of excellence in the provision of electricity”. Its strategic mission is to provide reliable, safe, environmentally friendly, and quality electricity for sustainable economic growth and improved quality of life for the people of Lesotho. LEC operates under six strategic goals, which are:
(i) To promote customer-focused business;
(ii) Improve security and quality of supply;
(iii) Promote healthy corporate governance;
(iv) Promote staff welfare and development;
(v) Promote research and development; and
(vi) Increase customer base and ROE
LEC key figures
The table below summaries the energy purchased and generated from different suppliers and intake points over the period 2014/2015 to 2017/201814.
Bulk Purchases (GWh)
Supplier |
Type |
2017/2018 |
2016/2017 |
2015/2016 |
2014/2015 |
LHDA |
Hydro |
518.3 |
534.9 |
520.8 |
515.2 |
ESKOM |
Import |
373.9 |
268.3 |
203.0 |
229.3 |
EDM |
Import |
105.2 |
72.1 |
41.9 |
|
Total |
Total |
892.2 |
908.4 |
795.9 |
786.4 |
Sources: LEC Annual Reports, Bureau of Statistics Energy Reports and LEWA Annual Reports
Electricity generated (GWh)
Power plants |
Type |
2017/2018 |
2016/2017 |
2015/2016 |
2014/2015 |
SEMONKONG |
Hydro/Diesel |
0.9 |
0.8 |
- |
- |
MANTSONYANE |
Hydro |
0.7 |
3.0 |
0.0 |
- |
Total |
Total |
1.6 |
3.8 |
- |
- |
Transmission Network15
The Transmission network evacuates power from the generation sources namely 'Muela Hydropower (LHDA), Eskom (South Africa) and EDM (Mozambique) to LEC load centres. The supply from 'Muela and Eskom plus EDM (at Maseru intake) is transmitted through the 132kV lines to Maputsoe Substation and Mabote Substation respectively. The supply from Eskom (Clarence intake) enters Lesotho through 88kV line at Khukhune Substation in Butha-Buthe, while Qacha's Nek intake is through 22kV line from Matatiele. The transmission lines are of voltage levels 132kV, 88kV, 66kV and 33kV.
Distribution Network16
The Distribution network distributes power from substations to electricity users. The Distribution network ranges from the voltage of 11kV up to the customers supply at 220V and 380V.
Approved LEC Maximum Demand Charge for 2019/20 (M/kVA)
Customer Category |
Approved MD Charges (M/kVA) |
Industrial HV |
272.7957 |
Industrial LV |
318.6322 |
Commercial HV |
272.7957 |
Commercial LV |
318.6322 |
Source: LEWA
Approved LEC tariff Levels for 2019/20 by LEWA Board
Customer Category |
Energy Charges (M/kWh) |
Adding Customer Levy1/ (M/kWh) |
Adding Rural Electrification Levy2/ (M/kWh) |
Final Approved (M/kWh) |
Industrial HV |
0.1936 |
0.2359 |
0.2559 |
0.2559 |
Industrial LV |
0.2144 |
0.2567 |
0.2767 |
0.2767 |
Commercial HV |
0.1936 |
0.2359 |
0.2559 |
0.2559 |
Commercial LV |
0.2144 |
0.2567 |
0.2767 |
0.2767 |
General Purpose |
1.5835 |
1.6258 |
1.6608 |
1.6608 |
Domestic |
1.4009 |
1.4432 |
1.4782 |
1.4782 |
Street Lighting |
0.7952 |
0.8375 |
0.8725 |
0.8725 |
Lifeline Domestic |
0.6500 |
0.6923 |
0.7273 |
0.7273 |
Source: LEWA ; Notes: 1/ At M0.0423/kWh ; 2/ At M0.02/kWh for large customers and M0.035/kWh for others.
12Sources: LEC Annual Reports, Bureau of Statistics Energy Reports; Note: - Not available
13Source: LEC Strategic Plan - Abridged
14Fiscal year, April YR-1 to March YR.
15Source: LEC
16Source: LEC
Mapping of ongoing power programs and projects
Program/project name |
Implementer/Dev. partner |
Amount (USD) |
Urban Distribution Rehabilitation and Transmission Expansion |
AfDB/GoL |
15.9 millions |
Neo1, 20 MW Solar PV |
AfDB/WB/IPP |
27.8 millions |
Neo2, 70 MW Solar PV |
Ministry of Energy/Exim Bank |
77.7 millions |
Maseru-Qacha 132kV transmission line |
AfDB,WB,DBSA/GoL/LEC |
50.1 millions |
Re-route Letseng Line (88kV) |
Local Bank |
12.0 millions |
Repair dongas, Mafeteng |
LEC |
0.1 million |
Repair dongas, Maseru |
LEC |
0.3 million |
Source: AfDB and Lesotho Energy Program under the GCF fund
Investment opportunities for the private sector
Some large-scale PV and wind projects are currently promoted and studied by private investors, which may lead to several public-private partnerships (PPP) or independent power producers (IPP) in the next few years. The following table shows a summary of renewable energy technical potential that private investors can tap into.
Summary of RE Technical Potential17
Technology |
Resource |
Generation Capacity (MW) |
Annual Generation (GWh) |
Utility-Scale Solar PV |
Solar |
118 |
372 |
Utility-Scale Wind |
Wind |
2,077 |
5,157 |
Small-Scale Hydro (<10 MW) |
Water |
36 |
193 |
Waste-to-Energy |
City Waste |
10 |
62 |
Solar Microgrids |
Solar Battery |
31 |
85 |
Floating Micro-Hydro Microgrids |
Water |
0.50 |
1.75 |
Solar Home Systems |
Solar Battery |
1.20 |
3 |
Micro-Solar Technologies |
Solar |
38 |
92 |
Total |
Total |
2,311.70 |
5,965.75 |
17 Source: See SREP Investment Plan for Lesotho for more details on the technical potential assessment.
Contact information of local donor representations
Organization |
Contacts |
African Development Bank Southern Africa Regional Office in South Africa
|
339 Witch-Hazel Avenue Highveld Ext. 78 Centurion, South Africa Tél: +27 12 003 6900 Mr Kapil Kapoor, Director General Email: k.kappor@afdb.org |
World Bank Lesotho Country Office |
Letšeng Diamonds House, Corner Kingsway and Old School Road, Maseru 100, Lesotho Tel : + 266-222-17000 Mrs. Elita Banda Email : ebanda@worldbank.org |
GiZ Lesotho Country Office |
P.O. Box 988 Maseru, 100 Lesotho Tel: +266 22 323 391 Alexander Erich, Project Officer Email: giz-lesotho@giz.de |
Delegation of European Union Lesotho Country Office |
167 Constitution Road, Maseru, West P.O. Box 518, Maseru 100 Lesotho Telephone: +266 22.27.22.00 Dr. Christian Manahl, Head of Delegation |
US Agency for International Development Southern Africa Regional Office in South Africa |
USAID/Southern Africa 100 Totius Street, P.O. Box 43 Pretoria Phone +27 12 452 2000 Fax +27 12 460 3177 Email pretoriainfo@usaid.gov |
About the market
-
Who is responsible for creating energy policy?
The Ministry of Energy and Meteorology is responsible for creating energy policy in Lesotho. Through its Department of Energy, the Ministry coordinates, monitors, and evaluates the programs and activities within the energy sector.
-
What laws, regulations, and plans/programs exist for clean energy?
The Government of Lesotho (GoL) has developed in 2013 the Lesotho Renewable Energy Policy (LesREP 2013), with the objectives to:
• Enhance the energy security of Lesotho by reducing reliance on fossil fuels and imported electricity; and
• Improve access to modern energy for rural and decentralized areas of Lesotho;
Under this policy, the GoL intended to create the Clean Alternatives for Rural Energisation (CARE) Fund, which would be financed by a clean energy levy charged for electricity sales and fossil fuel use. CARE Fund would provide interest subsidies for renewable energy incentives and offer incentives to rural energization. -
What is the structure of the sector? To what extent have generation, transmission, and distribution activities been unbundled?
Lesotho Electricity Company (LEC) is the sole operator mandated for electricity transmission and distribution in the country. It also has its own small generation facilities: the 180 kW Semonkong hydropower plant (with 500kW diesel generator), and the 2 MW Mantsonyane hydro plant. Lesotho Highlands Development Authority (LHDA), ESKOM of South Africa, and Electricidade de Moçambique (EDM) are the primary sources of electricity supply in Lesotho, with which LEC has agreements to purchase electricity.
-
Who owns and operates the grid-connected generation, transmission, and distribution assets?
LHDA and LEC own transmission and distribution lines in Lesotho. LHDA owns the transmission and distribution lines that were developed under Phase I of the LHWP . LEC owns and operates the transmission and distribution lines in the rest of the country, which includes 132 kV, 88 kV, 66 kV, 33 kV, and 22 kV transmission lines. The LEC also owns 132 substations in Lesotho, with 75 distribution substations located in Maseru19.
-
Are tariffs cost-reflective?
LEWA has several regulations that outline its tariff setting principles and filing procedures. The revenue requirement for LEC is set using a rate-of-return approach. LEWA is in the process of hiring consultants, with the support of AfDB, to conduct a cost of service study that will be used to design tariffs based on the principle of cost causation. Absent this information, tariff increases have recently been applied uniformly across all tariff classes regardless of the cost LEC incurs to serve each class. The tariff-setting process has shown to provide a sufficient level of revenue for LEC to cover its annual operating expenses. LEC operated with a net profit of M 56.3 million (US$ 4.35 million) in 2015/2016. These results show that tariffs are currently being set at levels that allow LEC to cover its cash operating expenses, but it is unclear whether LEC is earning a sufficient return on its investments.
Until their 2017/2018 tariff application, LEC did not have an asset registry to submit with their annual tariff filings, as required in LEWA’s filing procedures. Without an asset registry, LEWA did not have enough information to determine LEC’s regulatory asset base and was forced to set the return on asset discretionally each year. The lack of an asset registry also has meant that LEWA has not had sufficient information to verify the depreciation cost LEC includes in its annual filings. Now that LEC has completed the asset registry, it is anticipated the tariff will comprise a return on assets based on the actual regulatory asset base—and thus will be fully reflective of costs going forward20.
-
What is the status of the grid, and is it capable of handling intermittent (renewable) energy resources?
Lesotho grid is supporting the transport and distribution of electricity from LHDA, ESKOM, EDM, and LEC. Apart from the hydroelectricity provided by LHDA, no other RE resource is transported by the Lesotho grid. The ongoing Neo1, 20 MW Solar PV project, will improve the grid system capacity to support the handling of intermittent solar power.
-
Who is responsible for planning and procuring additional capacity to meet demand?
Peak demand for electricity in 2016 was about 153 MW, exceeding by far Lesotho’s installed generation capacity, around 75 MW. Peak demand is expected to grow to 304 MW by 2020 and 432 MW by 2030. The Lesotho Electricity Company (LEC) forecasts that it must import over 282 GWh of electricity from South Africa (Eskom) and Mozambique (EDM) to meet this growing demand.
-
Who is responsible for supplying electricity to consumers?
Lesotho Electricity Company (LEC) is the utility that distributes electricity in Lesotho.
-
Is there an independent regulator? Which activities are subject to economic regulation?
Created in 2002, the Lesotho Electricity and Water Authority (LEWA) is the economic regulator for the electricity sector. Its mandate was expanded in 2011 to regulate the water sector. The Authority independently deals with matters such as (i) issuing licenses for electricity supply activities; (ii) setting tariffs for the generation (including feed-in tariffs), transmission, and distribution; (iii) complaints handling and resolution; and (iv) the supervision of the implementation of the Quality of Service and Supply standards (QOSSS) by its licensees.
-
Is net metering allowed in the country?
Currently, there is no provision of net metering in Lesotho.
-
Does the country belong to a regional power pool?
Lesotho Electricity Company (LEC) is a member of the Southern African Power Pool, which aims, among others, to facilitate the development of a competitive electricity market in the SADC region.
-
Are there any interconnectors in place?
There is a 132 kV line interconnection, with a transmission capacity of 230 MW, between Lesotho and South Africa22 .
18 The Lesotho Highlands Water Project (LHWP) is an ongoing water supply project with a hydropower component, developed in partnership between the governments of Lesotho and South Africa. It comprises a system of several large dams and tunnels throughout Lesotho and delivers water to the Vaal River System in South Africa. In Lesotho, it involves the rivers Malibamatso, Matsoku, Senqunyane, and Senqu. It is Africa's largest water transfer scheme - Wikipedia.
19Source: SREP Invetsment Plan in Lesotho
20Source: SREP Investment Plan in Lesotho
21Source: SREP Investment Plan in Lesotho
22Source: SAPP 2018 Annual Report
About opportunities in the country
-
Is installed generating capacity adequate to meet existing demand?
Peak demand for electricity in 2016 was about 153 MW, exceeding by far Lesotho’s installed generation capacity, around 75 MW. Peak demand is expected to grow to 304 MW by 2020 and 432 MW by 2030. The Lesotho Electricity Company (LEC) forecasts that it must import over 282 GWh of electricity from South Africa (Eskom) and Mozambique (EDM) to meet this growing demand.
-
What is the current energy production mix?
Installed generation capacity was recorded at 75.7 MW in 2018, of which Hydro generation accounts for 98.9%, Diesel for 1.1%, and Solar for 0.7%.
-
What is the projected demand?
Peak demand for electricity in 2016 was about 153 MW. It is expected to grow to 304 MW by 2020 and 432 MW by 203023.
-
Is there a proposed new energy mix?
The GoL has set targets to increase RE generation by 200 MW by 2020 as part of efforts to mitigate the effects of climate change and solve Lesotho’s energy sector challenges. According to the SREP investment Plan, the annual electricity output from renewable energy will represent 65% of total output by 2020.
-
Will the current pipeline of renewable energy projects be sufficient to achieve plans?
Considering the pipeline of two Solar PV projects, Neo 1 (20 MW) and Neo 2 (70 MW), installed RE generation capacity will reach 165 MW, which is less than GoL target for year 2020. Moreover, Neo 2 commissionning date is likely to happen beyond this target date.
-
What is the investment potential associated with meeting Lesotho’s renewable energy goals?
The following table shows a summary of renewable energy technical potential that private investors can tap into.
Summary of RE Technical Potential24
-
What short and long-term opportunities for investment exist?
The Government of Lesotho is in the process of selecting its priority projects included in the SEforAll Investment Prospectus (draft) as part of its efforts aimed at meeting the SE4All goals and national targets. The prospective investment and project opportunities will result from the priority action areas that are presented in the “Lesotho SEforAll Country Action Agenda.” See table 4 in the draft document which summarizes the selected short and medium-term investments in the power sector over the period 2019-2022.
-
What is the tender process, and where are they announced?
Tenders are posted on the Government of Lesotho website at https://www.gov.ls/document-category/tenders/. The tendering process with direct relation with LEC business is also available at https://www.lec.co.ls/tender.
-
What financing options exist for developing renewable energy projects?
Depending on the partners involved in the project financing plan, financing instruments for renewable energy projects used so far are the mix of the following:
Government Budget Funding;
SREP Funding;
Private Sector Equity;
Grants;
Concessional Loans; and
Partial Risk Guarantee Instruments.
23 Source : SREP Investment Plan for Lesotho
24Source: See SREP Investment Plan for Lesotho for more details on the technical potential assessment.
About private sector participation
-
What are the incentives for foreign and private investment?
Lesotho is largely open to foreign direct investment (FDI) and treats foreign investors well. But FDI policy and the legal framework are weakly developed, and improvements are recommended. Business taxation, land regulation, work and residence permits, industrial and trade licensing, competition policy and aspects of foreign exchange control are singled out for attention. There are no incentives specifically for foreign investors, and no performance requirements are imposed only on foreign investors as a condition of investment.25
The National Investment Policy of Lesotho, adopted in 2015, informs national and potential foreign investors of the Government’s goals and policies in promoting and regulating investment and provides clarity about their obligations and opportunities.
-
Can a foreign registered company submit an Expression of Interest to develop a renewable energy project?
International Companies can submit an expression of interest to the Government of Lesotho through the https://www.gov.ls/document-category/tenders/.
Resource center
Key links
Key acts, decrees and ordinances
Institutional documents
Lesotho Energy Policy 2015-2025
Lesotho Adaptation to Climate Change
Lesotho National Strategic Development Plan 2019-2023
Lesotho Renewable Energy Policy
Lesotho Public-Private Partnership Policy
LEWA – Electricity Cost of Service Study
Key websites
Lesotho Electricity and Water Authority (LEWA)
Ministry of Energy and Meteorology
Lesotho Highlands Development Authority
Lesotho Electricity Company
Southern African Power Pool
African Development Bank Publications
African Economic Outlook 2019
Electricity Regulatory Index 2018
Other Publications
SE4All: Rapid Assessment and Gap Analysis for Lesotho
Green Climate Fund – Lesotho Energy Program
SADC Energy Monitor 2016
SREP Lesotho Investment Plan

Last update: May 2019
This webpage has been produced by experts from the African Development Bank (AfDB). AfDB does not guarantee the accuracy, reliability or completeness of the content included in this webpage, or for the conclusions or judgments described herein, and accept no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The African Development Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Board of Governors of The African Development Bank Group or the governments they represent.
The contents of this work are intended for general informational purposes only and are not intended to constitute legal, securities, or investment advice, an opinion regarding the appropriateness of any investment, or a solicitation of any type. AfDB or its affiliates may have an investment in, provide other advice or services to, or otherwise have a financial interest in, certain of the companies and parties named herein.