Report No. 4676-LSO Lesotho: Issues and Options in the Energy Sector ; L> January 1984 1S @~~~~~~1 Report of the jointUNDP/World Bank Energy Sector Assessment Program This document has a restricted distribution. Itscontents maynot be disclosed without authorization from the Government, the UNDP or the World Bank. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Report No. 4676-LSO
Lesotho: Issues and Optionsin the Energy Sector ; L>
January 1984
1S @~~~~~~1Report of the joint UNDP/World Bank Energy Sector Assessment ProgramThis document has a restricted distribution. Its contents may not be disclosedwithout authorization from the Government, the UNDP or the World Bank.
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JOINT UNDP/WORLD BANK ENERGY SECTOR ASSESSMENT PROGRAM
REPORTS ALREADY ISSUED
Country Date No.
Indonesia November 1981 3543-IND
Mauritius December 1981 3510-MAS
Kenya May 1982 3800-KE
Sri Lanka May 1982 3792-CE
Zimbabwe June 1982 3765-ZIM
Haiti June 1982 3672-HA
Papua New Guinea June 1982 3882-PNG
Burundi June 1982 3778-BU
Rwanda June 1982 3779-RW
Malawi August 1982 3903-MAL
Bangladesh October 1982 3873-BD
Zambia January 1983 4110-ZA
Turkey February 1983 3877-TU
Bolivia April 1983 4213-BO
Fiji June 1983 4462-FIJ
Solomon Islands June 1983 4404-SOL
Senegal July 1983 4182-SE
Sudan July 1983 4511-SU
Uganda July 1983 4453-UG
Nigeria August 1983 4440-UNI
Nepal August 1983 4474-NEP
Gambia November 1983 4743-GM
Peru January 1984 4677-PE
Costa Rica January 1984 4655-CR
FOR OFFICIAL USE ONLY
Report No. 4676-LSO
LESOTHO
ISSUES AND OPTIONS IN THE ENERGY SECTOR
January 1984
This is one of a series of reports of the Joint UNDP/World Bank EnergySector Assessment Program. Funding for this work has been provided, inpart, under the supplementary "Small-Country Assessment Program" financedby the Swedish Government through the UNDP, and work has been carried outby the World Bank. This report has a restricted distribution. Itscontents may not be disclosed without authorization from the Government,the UNDP or the World Bank.
ABSTRACT
Lesotho relies on imports to meet almost all of its energy require-ments: petroleum, power, coal and fuelwood from the Republic of SouthAfrica (RSA). While the value of energy imports represents seventypercent of merchandise export earnings, energy imports make up only eightpercent of total imports. The energy dependency problem is part of amuch broader problem of import dependency which is attributed toLesotho's geo-political situation. This report reviews Lesotho's optionsfor reducing energy dependency and makes projections of energy demandthrough 1990 under one economic growth scenario. While the country'soptions are limited by a relatively poor energy resource endowment and adifficult geo-political setting, the report concludes that Lesotho couldbenefit from external assistance for energy institution building andforestry sector management to achieve self-reliance in fuelwood.Financial resources also are required for extending the powertransmission system.
Abbreviations and Acronyms
ABFOL Anglo de Beers Forest Services LesothoBASP Basic Agricultural Services ProgramBbl Barrelboe Barrel of oil equivalentBRN Basic Rural NetworkBtu British thermal unitc.i.f. Cost, insurance, freightESB Electricity Supply Board (Ireland)ESCOM Electricity Supply Commission (RSA)FOB Free on boardGOL Government of LesothoGWh Gigawatt hourISOC Inter-State Oil Committeekcal Kilocaloriekm kilometerkVA kilovolt amperekW KilowattkWh Kilowatt hourLEC Lesotho Electricity CorporationLHWP Lesotho Highlands Water ProjectLNDC Lesotho National Development Corporationm3 Cubic meterMAM Ministry of Agriculture and MarketingMCRD Ministry of Cooperatives and Rural DevelopmentME Ministry of EducationMVA Megavolt ampereMW MegawattMWEMIN Ministry of Water, Energy and MinesMWh Megawatt hourp.a. per annumRSA Republic of South AfricaSACU South African Customs UnionSADDC Southern African Development Coordination Conferencetoe tonnes of oil equivalent
Currency Equivalents
Currency: Maloti (M)
1 M = US$0.9228I M = 1 Rand (R) 1/
Measurements
Bbl Barrel = 42 US gallons;159 liters
boe Barrel of oil equivalent = 6 million BtuBtu British Thermal Unit = 0.252 kilocaloriesGWh gigawatt hour = million kilowatt hourskJ kilojoulekm kilometer = 1,000 meterskW kilowatt = 1,000 wattskWh kilowatt hour = 1,000 watt hoursm3 cubic meterMW megawatt = 1,000 kilowattsp.a. per annumtoe tonne of oil equivalent = 39.68 million Btu'
10 million kcaltonne metric ton = 1,000 kilogramstpa tonnes per annum
1/ The Malioti is tied to the RSA's Rand through the Rand MonetaryArea (RMA) Agreement.
This report is based on the findings of an energy assessment missionwhich visited Lesotho in May 1983. The mission comprised Messrs. ZiaMian (Mission Chief), Amarquaye Armar (Energy Planner), Lars Hyden(Consultant - Power Systems) and Kapil Thukral (Researcher). Additionalassistance in reviewing hydrocarbon exploration information was providedby Messrs. Akin Oduolowu arid D.B. Eicher (Consultant). Secretarialassistance was provided by Mr. Jagdish Lal and Ms. Lydia Hancock. Thereport was discussed with the Government of Lesotho in Maseru in January1984.
III. ENERGY RESOURCE DEVELOPMENT ISSUES ............... 23Overview ...................................... 23Large Hydropower Options ...................... 23
Mini-Hydro Options . ......................... 26Mini-hydro in the Highlands ................ 27Mini-hydro in the Lowlands ................. 27Small Hydro Sites near Quthing ............. 28
Supply of Cooking Fuels ...................... . 31Fuelwood and the Woodlot Project ........... 31Biogas Production . . 33
Special Energy Options . . 34
Page No.
IV. INSTITUTIONS AND TECHNICAL ASSISTANCE .... 36Energy Institutions ..................... ... 36
Energy Planning and Administration . .36Electric Power . . ......... 36Forestry . . ............................... 37Other Responsibilities .... 38
Implications for External Assistance . . 39
ANNEXESI. Notes on the Energy Balance, 1981. . 40II. LEC - Schedule of Tariff and Charges .. . 41Statistical Annex,
Table 1: Petroleum Imports (1974-83) .... 44Table 2: Historical Power Demand .......... 45Table 3: GDP and GNP Trends
(1974/75 - 1982-83) ..... ..... 46
TABLES
1.1 Recent GDP Trends. .... . ............... . 2
1.2 Energy Imports ................................... 31.3 Commercial Energy Balance, 1981................ 42.1 Retail Petroleum Prices in Maseru ................ 72.2 Petroleum Pricing Formulae ....................... 82.3 Petroleum Imports . ............................... 102.4 Petroleum Imports, 1974-82.................. 102.5 Sectoral Consumpl:ion - Petrol and Diesel Oil 112.6 Petroleum Demand Forecast ........................ 122.7 LEC Electricity Statistics .................. -... 132.8 Power Load Forecast .............................. 152.9 Proposed Connections to the BRN .................. 182.10 Coal Imports (1975-1981). .*v 212.11 Projected Commerzial Energy Demand ............... 223.1 LHWP - Phased Development ........................ 243.2 Multipurpose Hydro Schemes ....................... 263.3 Mini Hydro-electric Projects ..................... 284.1 Petroleum Retail Stations in Lesotho ........ .... 38
MAPS
Electric Power Resources and Facilities (IBRD No. 17308)Petroleum Supply Facilities (IBRD No. 17434)
SUMMARY OF FINDINGS AND RECOMMENDATIONS
Overview
1. Lesotho relies on the Republic of South Africa (RSA) for most ofits energy requirements including power, petroleum, coal and fuelwood.In 1981, energy imports were 150,000 toe and absorbed about 11.7% of thecountry's foreign exchange earnings, including remittances. As energyimports account for only eight percent of total imports, energy appearsto be just a part of the much broader problem of Lesotho's economicdependency on the RSA. In practical terms, the country's options forreducing its energy imports are limited by a relatively poor indigenousresource endowment and a difficult geo-political situation. Hydropoweris the major resource but it will be expensive and take many years todevelop; its potential will depend on an agreement with the RSA to pur-chase water. Lesotho is virtually treeless, and although significantprogress has been made in reforestation through a Woodlot Project, thepace of replanting has been slow (400 ha/year) because of an absence ofskilled manpower. 1/ Lesotho will continue to rely on imports to meetthe bulk of its energy needs through the 1990s.
2. The Lesotho economy grew rapidly during the 1970s, with GNPgrowth averaging nine percent p.a., but the factors which propelled thisgrowth have weakened, and a GNP growth rate of less than three percentp.a. for 1982-83 is expected to be a more realistic reflection of futuretrends. As the external factors contributing to GNP are uncertain, theMission has used a three percent GDP growth scenario as a basis, togetherwith historical relationships between GDP and energy consumption, toestimate energy demand through 1990. The Mission projects that thedemand for commercial energy (excluding fuelwood) will increase at anaverage rate of five percent a year until 1990. Most of this demand willbe met from imports, further aggravating the country's balance-of-pay-ments position. Although these demand projections need to be improved,this is not critical as no major investment decisions are to be based onthem. In the case of hydropower development, a careful demand analysiswill be required before making any decisions on projects.
Electric Power Distribution
3. Lesotho meets more than 95% of its electricity needs throughimports from the Electricity Supply Commission (ESCOM) of the RSA. Thehigh growth rate in power demand over the past three years, more than 15%
1/ During the January 1984 draft review meeting, the Mission was in-formed that the manpower situation for the woodlot project had im-proved in 1983 and replanting increased to 1200 ha. In future, theplanting rate is expected to increase at 20% p.a.
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p.a., has overloaded the transmission system of the Lesotho ElectricityCorporation (LEC). The sub-grid serving Maseru, Roma, Mafeteng, Mohale'sHoek and Quthing needs immediate expansion to handle the projected 1984winter power demand. The LEC has started a LSM 6.6 million (US$6.3 mil-lion) expansion program by commissioning work on the construction of a 2x 40 MVA, 88/33 kV substation at Maseru. However, they have run short offunds and would need LSM 3.4 million (US$3.2 million) of external financ-ing to complete the project. In the Mission's view, construction of theMaseru substation is a high priority, and the Government should activelyseek external support funds for the project.
Rural Electrification
4. Several rural electrification (RE) schemes are being developedby LEC to supply power to public institutions in isolated areas in thehighlands. These RE schemes will use mini hydropower and/or diesel gen-eration; the Mission estimates that both these sources are economicallycompetitive in the highlands. The Electricity Supply Board of Ireland(ESB) had worked out a plan for RE in the lowlands consisting of con-structing a basic rural network (BRN) to supply power to 388 publicinstitutions and rural households in about 1,000 villages. Recent ex-perience in the Hololo Valley suggests that power demand in rural house-holds is low. In the Mission's view, the economic justification forlarge-scale rural electrification has not been established and theGovernment should consider such a project with caution.
Petroleum Supplies
5. Lesotho imports all of its petroleum products from the RSA. AnInter-State Oil Committee (ISOC) consisting of representatives from theRSA, Lesotho, Botswana and Swaziland (BLS countries) was created in 1979to monitor the procurement:, allocation, pricing and conservation of pe-troleum. In the Mission's view, it would be difficult for Lesotho toseek to reduce the cost of petroleum imports through alternative supplyarrangements because of the geo-political situation and land-lockednature of the country. However, because of supply shortages or emer-gencies, the current capacity of petroleum storage facilities (six daysupply cover) needs to be eKpanded. In addition, the GOL should also aimat rationalizing the internal marketing and distribution system.
Development of Indigenous Energy Resources
6. The country's potential energy resources include hydropower, andmodest volumes of fuelwood and, possibly, hydrocarbons. Fuelwood is cur-rently the only viable domestic alternative to imports from RSA. Largescale hydropower would require agreements on water sales to the RSA. Thehydrocarbon potential is unzertain. There may be some difficulty in har-nessing new energy sources such as wind and solar because of largeseasonal variations in climatic patterns.
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Hydropower
7. The main options lie with large hydro sites which have beenidentified on the Senqu (or Orange) and Senqunyane rivers. The two mostadvanced options are the Lesotho Highlands Water Project (LHWP) and theJordane Project. The Mission supports the decision by the EEC to fund adetailed feasibility study on the LHWP and recommends that particularattention be given to: (i) identifying and quantifying the distributionof benefits between RSA and Lesotho; and (ii) examining the viability ofa smaller, separate power scheme for Lesotho. 1/
Fuelwood
8. The GOL entered into a joint venture with the UK-ODA and Anglo
de Beers (RSA) in 1973 to develop fuelwood supplies through a WoodlotProject. Although implementation of the project encountered problemswith land acquisition, lack of a proven technical package for reforestingunder the harsh climatic conditions in Lesotho, and a shortage of localskilled personnel, about 3,600 ha of mainly eucalyptus species have beenplanted and are achieving mean annual increments of about 7 m /ha/year.Progress has been made in securing land for tree planting (see footnote 1to para 1) and in identifying a suitable technical package for treeplanting in the lowlands. In the Mission's view, there is potential forreplacing fuelwood imports from the RSA. Local woodlots are currentlysupplying fuelwood competitively. The Mission supports the initiativesmade by the management of the Woodlot Project to extend the project lifeto 20 years and have a fuelwood marketing study done to determine theproduction costs and a least cost distribution method. In the Mission'sview, the main constraint in the reforestation effort was the lack offoresters and a forestry service to administer several ongoing andproposed projects. There is now an urgent need to establish a ForestryDivision within the Ministry of Agriculture and Marketing (MAM) to takeover the responsibility of coordinating and administering these projectsfrom the management of the Woodlot Project. The African Development Bank(AfDB) is considering technical assistance for forestry institutionbuilding as part of a proposed US$8.3 million Conservation ForestryProject. The Mission recommends that the scope of the institutionbuilding component in the proposed AfDB project be expanded to includethe establishment of a project implementation unit as a nucleus ForestryDivision of MAM.
Hydrocarbons
9. In 1972, the Government entered into an exploration agreementwith Westrans Petroleum Inc. of the USA who later did some photogeolo-gical mapping in parts of the Lesotho lowlands. These studies indicated
1/ Stage I of the Feasibility Study was completed in December 1983. TheStudy recommends that Lesotho should go ahead with Stage II (to becompleted by late 1985).
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favorable conditions for geophysical exploration, and Westrans proceededto do further gravity and magnetic surveys to locate a structure fordrilling. Later, in 1974, Westrans drilled a 5,421 foot hole at Mahobongbut there were no significant oil or gas shows. Westrans by then hadbeen acquired by ELF Aquitane of France and relinquished the conces-sion. The Government does not believe that this exploration effort byWestrans is sufficient to base any conclusions on Lesotho's hydrocarbonpotential. In the Mission's view, GOL's desire to attract further petro-leum exploration activity would require that external assistance be pro-vided to the Department of Mines to prepare the necessary maps and a goodwell log of the Mahobong-l well, and possibly some assistance be providedto allow the Lesotho National Development Corporation (LNDC) to prepare aclear statement of concessicon terms, fiscal regulations, and the legisla-tive framework for exploration contained in the Mining Rights Act of1967.
Institutions
10. The Government of Lesotho has recently established an EnergyPlanning Unit (EPU) within the Ministry of Water, Energy and Mines(MWEMIN) to be responsible for preparing and implementing an appropriateenergy policy and program. The EPU is yet to be adequately staffed. AnUndersecretary of the MWEMIN works as the head of EPU part-time, and alsotakes care of day-to-day matters on an ad-hoc basis without the benefitof technical or staff support. The Mission recommends that a small staffbe recruited for the EPU who could then be assisted and trained by anexpatriate Energy Economist to handle the EPU's responsibilities.
Implications for External Assistance
11. Considering that (i) large investments in hydropower optionssuch as the LIWP and the Jordane Project are not required before the1990s; and (ii) that the large scale development of fuelwood supplies isbeing tackled as part of an overall forestry/conservation strategy, theMission estimates that LSM 3.4 million (US$3.2 million) will be the majorinvestment required in the energy sector for expanding the LEC system.The main focus of future external assistance for energy development inLesotho should be technical assistance for institution building in theForestry Division, the Energy Planning Unit, hydrocarbon exploration andthe LEC.
I. ENERGY AND THE ECONOMY
Country Situation
1.1 Lesotho is a small kingdom located entirely within the bordersof the Republic of South Africa (RSA). Most of its 30,350 square kilo-meters of land area is mountainous, rising from 5,000 feet in the west to11,000 feet in the east. The predominant vegetation is grassland, andthere is a scanty tree cover from years of overgrazing by livestock.Most of the country feeds into the Senqu (Orange) River system whichflows in a southwesterly direction.
1.2 About 13% of the country's 1.4 million people (1982 estimate)live in urban centers. About 11% of the working population dependsdirectly on the RSA for employment, and a majority of these migrantlaborers work in the RSA mines. The population of Lesotho is projectedto grow at about 2.3% a year until the end of the century.
1.3 Lesotho is designated by the UN as one of the least developedcountries. Its economy is open and mainly dependent on the RSA. In1982-83, it had an estimated GDP of LSM329.0 million (US$303.6 million)and an estimated GNP of LSM557.3 million (US$514.3 million). The dif-ference between the GDP and GNP is made up largely by remittances frommigrant workers. 1/ The real GDP and GNP growth rates were 8% p.a. and9% p.a. respectively, during the 1970s. The main factors propelling thisgrowth were:
(i) the increased remittances from migrant workers, which more
than quadrupled between 1975 and 1980;
(ii) the increase in Customs Union payments 2/ resulting fromadditional revenue derived from a 15% surcharge imposed bythe RSA in 1979;
(iii) the opening up of the Letseng-La-Terai diamond mine forexports in 1977; 3/ and
1/ These remittances usually constitute over 40% of the GNP.
2/ Over 70% of the Government's income comes from the payments of theCustoms Union formed in 1910 by Botswana, Lesotho, Swaziland and theRSA (the dominant partner). Over 95% of Lesotho's imports, includ-ing nearly all of its energy requirements, come from the RSA. Itsexports either end there or go to the rest of the world through theRSA.
3/ The diamond mine was uneconomic and closed down in 1982.
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(iv) the inflow of substantial external assistance, particularlybetween 1976 anid 1979, following border problems with theRSA.
1.4 Recent trends in the growth of national income are shown inTable 1.1. Despite rapid growth in the 1970s, the basic structure of theeconomy has not changed. However, excessive soil erosion has reducedarable land by an estimated seven percent, and the socioeconomic condi-tions for more than 90% of t:he population that still depends on agricul-ture for their livelihood have worsened, including a reduction in theavailability of crop residues for energy. Industrial options are limitedbecause of the shortage of skilled manpower, a small domestic market, andheavy reliance on imported raw materials. 1/ Manufacturing output andhandicrafts are yet to exceed six percent of GDP.
Table 1.1: Lesotho - Recent GDP Trends(1980/81 Prices)
1.5 The factors which sustained rapid economic growth in the 1970shave weakened over the past few years. Specifically: (i) the number ofBasotho mine workers fell from 130,000 in 1977 to about 118,000 in 1982because of RSA's policy of increasing employment opportunities for itsown blacks, the mechanization of certain mines, and the closing of mar-ginal mines; (ii) the closing of the Letseng-La-Terai diamond mine in1982 has depressed export earnings; and (iii) receipts from the CustomsUnion have increased by only 4.3% a year since 1979/80. 2/ In 1982/83,real GDP growth is estimated at 3.1% a year. In the Mission's view,
1/ Most enterprises are small and over 80% of the relatively fewmedium- to large-size enterprises are mostly owned by the SouthAfricans or jointly ownied by the GOL.
2/ Total receipts to Lesotho from SACU in 1978/79 were about LSM65million and about LSM108 million in 1983/84. In 1984/85 receiptsare estimated to increase to LSM151 million.
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Lesotho's economy will not be able to repeat the performance of the1970s, and future GDP growth may not even exceed 3.0% a year. 1/ Thisview is shared by a visiting UNDP Technical Assistance Team, with whomthe Mission had extensive discussions. For the purpose of preparingenergy demand projections in this report, the Mission agreed with theGovernment to use an average real GDP growth rate of 3.0% a year.
Energy Imports
1.6 Lesotho relies exclusively on the RSA to meet most of its energyrequirements. Imports include refined petroleum products, electricpower, coal, and fuelwood. The contribution of each to the 1981 importbill is shown in Table 1.2. The GOL is concerned about this level ofdependence and the high cost of supplies from the RSA. While the energyimport bill absorbed 11.7% of foreign exchange earnings in 1981, 2/energy imports represent only eight percent of total imports, reflectinga much broader dependence on imports for most economic activities.Lesotho's options for reducing its dependency on RSA for energy arelimited; interfuel substitution possibilities are almost nonexistent, andthe energy resource endowment is relatively poor.
Table 1.2: Energy Imports
'000 toe Million Maloti
Electric Power 29.3 3.0Petroleum Products 61.8 25.6Coal 41.9 0.7Fuelwood 9.7 0.5
Total 142.7 29.8
As (%) of value of total imports 7.7As (%) of total exchange earnings 11.7
Source: Mission estimates based on data from Statistics Department.
1/ As the number of Basotho workers in the RSA is expected to decline,their remittences will also decline accordingly. The GNP growthrate, therefore, is uncertain and is expected to be below the GDPgrowth rate.
2/ The export earnings of Lesotho do not usually cover more than 10% ofannual import requirements. In 1981, the balance of trade showed adeficit of LSM343 million. Export earnings were about LSM43million.
Energy Balance
1.7 Table 1.3 presents the Mission's estimate of the energy balancefor 1981 based on data obtained from energy institutions. The balanceshould be refined once the proposed Energy Unit of the Ministry of Water,Energy and Mines (MWEMIN) becomes operational and able to yield morespecific data. The information at hand suggests that the total energysupply in Lesotho during 1981 was about 146,200 toe, most of which wasimported. Per capita commercial energy use (excluding dung and shrubs)was about 0.1 toe, the lowest of the member countries of the SouthernAfrican Development Coordination Conference (SADCC) 1/ and among thelowest in the world.
Table 1.3: Lesotho - Commercial Energy Balance, 1981('000 toe)
a/ Estimates of domestic fuelwood production and other biomass (fromtrees and woody shrubs) are not available and hence are excludedfrom this balance.
1/ Members include: Angola, Botswana, Lesotho, Malawi, Mozambique,Swaziland, Tanzania, Zambia, and Zimbabwe.
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1.8 Energy imports consist of petroleum products (44.7%), coal(33.6%), electricity (15.0%), and fuelwood (6.7%). The major petroleumproducts used are gasoline, gas oil and kerosene/jet fuel. About 48% ofthe petroleum products are retailed for use in lighting and privatetransport. The commercial/government sector consumes about 27%, whilethe industrial sector consumes only 8% of all petroleum products. Nofirm estimates are available on the use of crop and animal residues(dung) for cooking and heating in rural areas.
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II. ENERGY DEMAND AND PRICES
Petroleum
Supplies and Pricing Arrangements
2.1 Petroleum product imports consist of liquefied petroleum gas(LPG), petrol (gasoline), illuminating paraffin (kerosene), turbo jetfuel, automotive diesel oil (LDO), and aviation gasoline. Small quan-tities of power paraffin are also imported for tractors and fork lifts.All refined petroleum products are imported through the RSA underarrangements covered by the South African Customs Union (SACU) Agree-ment. 1/ An Inter State Oil Committee (ISOC) created in 1979 monitorsthe procurement, allocation, pricing and conservation of petroleum forthe BLS (Botswana, Lesotho, and Swaziland) countries. The ISOC has eightmembers, two from each BLS country and two from the RSA. The Committeemeets every three months to review and monitor the developments inpetroleum supplies and prices. When there are shortages of oil, the RSAinforms the Committee of new allocations and prices, and the Committeehas little say on this matter.
2.2 The petroleum market of about 1,400 bbl/day is shared among fivemajor oil companies: BP, Caltex, Mobil, Shell and Total. The mainpetroleum storage facilities are in Maseru and can handle 1,269 m3 orsome 8,000 barrels (IBRD Map 17434). In the Mission's view, thesestorage facilities are inadequate because they provide a cover for onlyabout six days demand at current consumption levels. In fact, deliveriesto most of the outlets have to be made directly from storage points inthe RSA. This has created shortages in the past and makes Lesothovulnerable to petroleum shorl:ages during emergencies. BP currentlyshares its facilities with Shell and Caltex, 2/ and Mobil operates anindependent facility. GOL should, over time, aim to increase the storagecover from the current level of six days to a desirable safe level. Thismay better enhance Lesotho's security of supply during shortages orcutoffs from the RSA.
1/ The current SACU Agreement was established between the RSA and theBLS countries in 1969. The original Customs Union (CU) arrangementsgo as far back as 1890. The 1969 Agreement establishes specificrevenue pooling (called Consolidated Revenue Fund - CRF - of SouthAfrica) and revenue sharing (determined by a formula provided for inArticle 14 of the Agreement) arrangements.
2/ The Caltex-owned storage facilities were blown up in February, 1983and Caltex now shares facilities with BP. Caltex is installingthree new underground tarks at the BP/Shell facilities (included inthe data on storage facil'ities).
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2.3 Petroleum prices are equalized at the six base towns of Butha-Buthe, Leribe, Teyateyaneng, Mafeteng, Mohale's Hoek, and Maseru. Pricesto other destinations are based on the road distances from the nearestbase town. Table 2.1 shows prices in Maseru during March, 1983. Thecalculation of the landed cost (Maseru) of petroleum products is basedon: (i) an average of Singapore postings for BP, Shell, Mobil andCaltex; (ii) the cost of shipping based on the Worldwide/Tanker NominalFreight Scale (AFRA), adjusted by the average world scale freight ratefor clean General Purpose (GP) vessels; (iii) insurance at 0.1009% of thef.o.b. price; (iv) ocean losses at 0.3% of c.i.f.; (v) landing, wharfage,coastal storage and handling charges applicable at the 'deemed' port ofdischarge; (vi) the transport cost from discharge point to Maseru; and(vii) exchange adjustments based on an average exchange rate for acalendar month between Maloti (LSM) and the US dollar (Table 2.2).
2.4 The marketers' and retailers' margins are determined by the oilcompanies and equal those in the RSA. Prices in Lesotho are maintainedclose to those prevailing in the border towns in the RSA (IBRD Map17434). In determining the prices, the oil companies consult closelywith the Department of Mineral Affairs in the RSA. In addition, a SafeFuel Fund (SFF) is levied to generate finances for fuel-related invest-ments and to equalize and stabilize prices. The BLS countries do nothave much say in the administration of the SFF and appear concerned thatthe SFF was used in part to generate financing for the SASOL (Syntheticfuel) Project of the RSA.
Table 2.1: Retail Petroleum Prices in Maseru(March 1983)
Duty Price to ConsumersLSM/liter LSM/liter US$/AG
Mogas 93Retailer 0.103 0.560 1.96C.U. and Farmer 0.103 0.574 2.00
Mogas 87Retailer 0.103 0.563 1.97C.U. and Farmer 0.103 0.568 1.98
2.5 Although the costs of petroleum imports into Lesotho are rela-tively lower than in other landlocked countries such as Malawi, Burundiand Rwanda, the marketers' operating margins are high and reflect theadverse geo-political factors in the sub-region. Lesotho's options forreducing costs and creating flexibility of supplies are limited by theworkings of the current system. For example, in an attempt to reduce thecost of supplies in 1979, the GOL obtained 70,000 metric tonnes of crudeoil 1/ from the Societe Nationale (SONATRAC), the Algerian national oilcompany, and had the oil relined at the refinery in Maputo, Mozambique,before shipping to Lesotho for internal consumption. The RSA refused toallow passage for these supplies through its territory and it ultimatelytook Lesotho about four years to dispose of the products by selling themto a third party. In the Mission's view, the current system, althoughrelatively costly, seems tc. work adequately; alternatives only can bedeveloped if the Customs Union arrangements are altered and the political
1/ The Murbane crude oil was obtained as a result of a swap arrangedwith Abu Dhabi and shipped from Jebel Dhanna to Maputo.
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situation in the region changes. At this time, therefore, it would seemcounterproductive for GOL to reduce the cost of imports or try to makealternative supply arrangements. However, the Mission finds a clear needfor the GOL to keep itself fully informed of developments in supplies andprices and the operation of current arrangements so that it can deal withday-to-day changes in the petroleum sector and develop an effective long-term policy. To help the GOL achieve this capability, the Missionrecommends a regional technical assistance program for BLS countries.
2.6 The Government is considering implementating a service stationrationalization plan. This plan may reduce the internal cost ofdistribution which the Government (under the current pricing policy) maybe able to collect as tax. 1/ The Mission supports this concept andrecommends that the scope of the plan be extended to the entire distri-bution and supply network with a view to reducing both the cost of dis-tribution and the number of oil companies operating in the country.
Historical Demand
2.7 Table 2.3 shows the average yearly growth rates in petroleumimports between 1974 and 1982. Between 1974 and 1979, petroleum importsin Lesotho increased at 13% p.a., and at 12.3% p.a. between 1979 and1982. The main factors contributing to these increases were: (i) a lowbase demand level of 525 bbl/day in 1974; (ii) the start-up of diamondmining activities in 1977 (the mine was closed in 1982); and (iii) therapid buildup of the country's infrastructure following political devel-opments in the region which culminated in the closing of the border withpart of the RSA (Transkei) in 1976.
2.8 Petroleum imports increased from 30.6 million liters in 1974 to56.6 million liters in 1979, and 80.1 million liters in 1982 (Table 2.4).Beween 1974 and 1979, the demand for diesel oil grew the fastest due toincreased construction activity. Since 1979, the relative share ofvarious products has remained virtually unchanged.
2.9 In 1979, the commercial sector consumed about 43% of diesel im-ports (Table 2.5). By 1982, their share had dropped to 27%. Petrol ismainly used by private transport which moves freely across the border. Asignificant price increase in petroleum products would divert purchasesacross the border to the RSA.
1/ The prices in Lesotho are kept in line with those in the RSA.
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Table 2.3: Petroleum Imports
Annual Average Growth Rates a/(percent)
197 4-79 1979-82
Total Petroleum Products 13.0 12.3Petrol 14.3 12.0Diesel Oil 20.1 11.5Road Transport Fuels b/ 16.7 11.8
2.10 The factors which contributed to the rapid growth in petroleum
demand and GDP in the 1970s have weakened; therefore it is unlikely thatthe economy will be able to repeat its past performance. However,because of the low current per capita petroleum demand (0.3 boe in 1982),the Mission estimates the per capita demand for petroleum products toincrease at 2.9% p.a. until 1990, although the underlying growth rate inGDP per capita will only be 0.7% p.a. This is mainly due to the expectedincrease in avgas and jet turbo fuel use resulting from GOL's plans toincrease air transport services by expanding the international airport inMaseru and engaging two larger aircrafts in the Lesotho Air fleet. Theprojected increase in petroleum product demand also is due to increaseddiesel oil use by installing diesel generation units in isolated areas inthe highlands. However, demand growth for other major fuels--gasolineand paraffin--is expected to decline from 13.4% p.a. and 8.9% p.a.respectively between 1974 and 1982, to 4.8% p.a. and 3.6% p.a during the1982-1990 period. Based on these expectations, the total demand forpetroleum products is estimated to increase at 5.3% p.a. until 1990.
2.11 Lesotho imports almost all its electric power from the Electri-city Supply Commission (ESC'OM) in the RSA. Purchases are made from fourpoints: (i) Hendrick's Drift in the north, through an 88-kV line whichprimarily serves the diamKnd mine at Letseng-La-Terai. This line alsosupplies a rural electrification scheme in the Hololo Valley; (ii)Maseru, through three 11-kV lines; this is the main point of intake toLesotho. The 11-kV sub-grid from Maseru extends to Teyateyaneng andKolonyama to the north of Maseru, and Mazenod, Roma, Mafeteng, Mohale'sHoek, Quthing and Mount Moorosi to the south; (iii) Ficksburg Bridge, viaan 11-kV line which supplies the Maputsoe industrial area. Areas southof Mapoteng and Butha-Buthe are supplied through branch-lines fromFicksburg Bridge; and (iv) Peka, through a 11-kV line which was commis-sioned in 1982 to supply the new Water Treatment Plant (IBRD Map17308). It also extends to the Peka village. The Lesotho ElectricityCorporation (LEC) also maintains some diesel generators 1/ at severalisolated centers. These include Mokhotlong (260 kW), Qacha's Nek(2 x 250 kVA), and Mafeteng (500 kVA).
1/ Standby generators are maintained by LEC at Mafeteng (500 kVA), andMohale's Hoek, Quthingr and Teyateyaneng (250 kVA each).
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2.12 As of March 1983, LEC had a total of 5,155 consumers in alltariff categories, 1,388 of whom were in the general purpose tariff cate-gory. About 22 of these customers accounted for 30% of total sales.Power statistics for LEC between 1970/71 and 1981/82 are shown in Table2.7. These statistics exclude sales through Hendrick's Drift to the dia-mond mine which has now closed and is expected to remain closed. 1/ TheGovernment is considering auctioning off the unused mining equipment.Total purchases by LEC through Maseru and Ficksburg Bridge grew from 9.6GWh in 1970/71 to 92.5 GWh in 1981/82, reflecting a 22.9% yearly growthin electric energy demand which was matched by a 21.5% yearly growth inthe maximum demand. The combined maximum demand for the above two sub-grids is estimated at 27 MW for 1982/83. This high growth rate in powerdemand has overloaded the transmission system, particularly the sub-gridfrom Maseru. Although system losses have also grown from 7% in the early1970s to 12% in 1982/83, the new system expansion program is expected tocorrect this situation. LEC is promoting the use of heatstorage/radiators (concrete or brick slabs) to reduce the demand forheating large offices during winter mornings. 2/ Heat storage/radiatorsare heated overnight (storage mode) and turned off in the mornings. TheMission supports this initiative.
a/ Excludes generation in isolated diesel stations.
Source: LEC
1/ The diamond mine consumed about 27.3 GWh in 1981/82 and operatedthat year with a maximum demand of 4.8 MW. The 88-kV line con-structed to supply power to this mine now supplies power to theHololo Valley.
2/ The annual transmission system load factor, which was 0.43 in1982/83, has fluctuated between 0.41 and 0.48 over the past decade.The load is normally greatest in July, i.e. in the middle of thewinter, when a substantial amount of electrical heating is needed.The demand is greatest in the morning between 8 a.m. and 9 a.m. whenheating is turned on in the offices. The annual load factor variessomewhat between years. During the 1970s the load factor decreaseda little. In 1982/83, it was 0.43.
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Load Forecasts
2.13 A load forecast using minimum and maximum power growth scenarioswas prepared by consultants to LEC in the mid-1970s: (i) in the maximumgrowth scenario, the growth rate in power demand was gradually loweredfrom an average of 24% p.a. (1974-1980) to 10% p.a. until the year 2000;and (ii) in the minimum growth scenario, the demand growth was scaleddown from 19% p.a. (1974-1980) to 8% p.a. (1980-2000). The actual growthin demand until 1982/83 has followed the minimum growth scenario. Thisis also reflected in a recent load forecast prepared as part of feasibi-lity studies for the Lesotho Highlands Water Project. 1/ LEC's currentload forecast is based in part on a recently completed Transmission Deve-lopment Report (1983). 2/ This load forecast assumes a 15% yearly growthrate in demand up to 1990, and 10% a year thereafter. The Missionreviewed these load forecasts and revised them on the basis of new con-nections in different consumer categories. LEC currently has 3,677 con-sumers (about 10% of urban households) in the domestic tariff category 3/and has recently introduced a new system under which applicants for newconnections under the domestic tariff category have to pay a ten percentdeposit rather than the full connection fee. The balance has to be paidin installments over severL years. This scheme has encouraged new appli-cations for service. LEC is now providing connections to about 10-12 newdomestic consumers each week, or 500 to 600 consumers a year. The growthin demand for large, energy-intensive projects will depend on the imple-mentation of the plans ]?repared by the Lesotho National DevelopmentCorporation (LNDC). LNDC meets with LEC on a biannual basis to reviewthe status and indicate the power requirements of projects under imple-mentation. At the time of the assessment mission, LNDC projects in-cluded: a TV assembly plant, a towel and sheet fabric mill, and a sheet,linen and tablecloth mill in Maseru; and a number of wholesale stores atButha-Buthe and Mafeteng. Other potential sources of demand for electri-city include the proposed new international airport and an industrialprocessing zone in Maputsoe.
2.14 The Mission believes the growth in power demand in Lesotho willbe lower than projected by the LEC. Assuming that the long-run GDPgrowth rate averages about, 3.0% a year and the electric energy/GDP elas-ticity coefficient is maintained at 3.0 until 1990 before dropping to 2.0(historical coefficient experienced by countries at a similar stage ofdevelopment), the power load on the LEC system will increase at 10.0%p.a. until 1990 (Table 2.8). In the Mission's view, LEC's original load
1/ A confidential report, 'Lesotho Highlands Water Project', June 1979.
2/ 1983 Report by Consulting Engineers, Ireland Electricity SupplyBoard. The report assumes a 12.5% p.a. growth rate for power demandafter 1990 but LEC has adopted 10% p.a.
3/ This category represents about 22% of total power use (Table 1.3)and at current connecLion rates is expected to increase at 15% p.a.
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forecast is high and should be adjusted downward. However, the differ-ences in the load forecasts are not critical from the viewpoint of adecision on the first phase of the highland water project.
2.15 LEC purchases power from ESCOM (RSA) under terms which are con-tained in the 1967 Memorandum of Agreement between GOL and ESCOM. TheAgreement has been subject to several amendments which affect the powerrate, determined by the following formula:
(i) unit charge LSMO.01209/kWh (January, 1983); 1/
(ii) demand charge, referring to the largest number of unitssupplied in any period of 60 consecutive minutes in a
month. Currently LSM7 per kW;
(iii) service charge of LSM20-25 per month, depending on intake
point;
(iv) discount of ten percent, which is applied to the total unit,demand and service charges, and is reduced by LSM1,500; and
1/ The Unit Charge is adjusted every three months to reflect coalprices in the RSA. About 93% of ESCOM's generating capacity isbased on coal.
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(v) surcharge (currently 47.5%). 1/
2.16 The average purchase price or power rate for LEC during 1982/83was 0.033 LSM/kWh (US35.8 m:ills/kWh), and is likely to increase to 0.037LSM/kWh (US40.1 mills/kWh) during 1983/84 if the surcharge remains at thecurrent level. These power rates are still among the lowest in theworld. The cost of fuel for diesel generation in LEC's isolated stationsis between 0.20-0.24 LSM/kWb (US$0.22-0.26/kWh).
2.17 LEC electricity tariffs 2/ have six categories: (i) a lifelineblock tariff which is based. on a load limit scale and is currently un-available to new customers; (ii) a domestic tariff which also applies toprimary and secondary schools; (iii) a general purpose tariff foroffices, shops, churches, etc.; (iv) a commercial tariff with maximumdemand rating for non-indust;rial consumers; (v) an industrial tariff withmaximum demand rating; and (vi) an off-peak tariff (Annex II). Thetariff structure within the domestic and general purpose tariffs is de-clining block based as the unit charge decreases with greater electricityconsumption on a monthly basis. The unit charge falls from 0.066 LSM/kWhto 0.046 LSM/kWh above 300 units/month, and from 0.13 LSM/kWh to 0.0725LSM/kWh above 100 units/mont-h for the domestic and general purpose cate-gories, respectively. Altlhough this may be consistent with LRMC underthe current distribution system, it does not encourage conservation inelectric energy use. Moreover, as indigenous supply sources are to bedeveloped and sufficient funds are to be generated for upgrading andmaintaining the existing transmission system, the tariffs should be re-vised. Specifically, the gap in fixed charges for the domestic tariffshould be narrowed to favor low-income consumers, and a flat rate adoptedfor the general purpose tariff. In general, LEC tariffs are lower thanin Botswana, slightly higher than in Swaziland but roughly equal toneighboring communities in the RSA. To raise finances for transmissionsystem expansion, however, LEC should plan for a modification of thetariff level and structure to reflect the long-run marginal costs ofsupply.
LEC System Expansion Plan (1]983-1985)
2.18 LEC is implementing an LSM6.6 million (US$6.3 million) invest-ment program to upgrade its transmission network. Construction has al-ready started on a 2x40 MVA, 88/33 kV sub-station at Maseru to handle theprojected power demand for the 1984 winter season and to upgrade thecapacity at the Maseru intake point from 30 MW to about 70 MW. Other
1/ The surcharge was 10% in April 1981, but was increased to 22% inJanuary 1982, 29% in Jaly 1982, and to the current level of 47.5% inJanuary 1983.
2/ The tariffs have been reviewed in detail in Tariff Structure of theLesotho Electricity Co rporation, UNDP Report by R. Srivastava.
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projects included in the capital program are: (i) a new l0-MVA, 33/11 kVTransformer at Sebaboleng; (ii) a 5-MVA, 33/11 kV Station operating atMazenod; (iii) a 2-MVA, 33/11 kV Transformer at Roma; (iv) a new 33-kVline at Roma-Molimo Nthuse; (v) a new 33-kV line between Maseru andTeyateyaneng; (vi) a new 2-MVA, 33/11 kV Transformer at Pioneer Road;(vii) reconstruction of the 33-kV line between Mazenod and Mafeteng; and(viii) upgading of the 33-kV line between Maseru and Mazenod. LEC hasrun short of funds and is seeking about LSM3.4 million (US$3.2 million)in external financing to supplement the LSMl.5 million (US$1.4 million)being raised from a sales tax, and LSMl.7 million (US$1.6 million) fromLEC's own finances. The Mission considers the Maseru sub-station con-struction a high priority which deserves support from bilateral sources.
Rural Electrification
2.19 A number of Rural Electrification (RE) schemes are being devel-
oped by LEC to supply public institutions in "isolated" areas. A 250 kWdiesel unit has been installed at Mokhotlong to supply power for pumpingwater (73 kW demand), grain milling (35 kW), and a few other smaller con-sumers, and about 30 consumers (peak demand of 40-50 kW) are served byLEC's diesel station at Qacha's Nek. The high costs of generation re-flect fuel costs of between LSMO.20-0.24/kWh (US$0.18-0.22/kWh). LEC istherefore investigating mini-hydro units to substitute or supplement itsdiesel operations in Mokhotlong and Qacha's Nek. A site with a 50m headhas been located at Tlokoeng on the Khubelu River; a 700 kW unit in-stalled here could generate 3.4 GWh a year to supply Mokhotlong. Anothersite with a 30m head on the Tsoelike River could provide about 2.6 GWh ayear (482 kW installed capacity) to Qacha's Nek; this site appears favor-able, as LEC generation costs would be about LSMO.20-0.33/kWh or US$0.18-0.31/kWh (30% capacity utilization), and LSMO.08-0.13/kWh or US$0.06-0,11/kWh (80% capacity utilization). Although 80% capacity utilizationis unlikely without integrating the mini-hydro plant into LEC's grid, theMission believes that the mini-hydro option is competitive with diesel inthe highlands of Lesotho. The most appropriate strategy for mini-hydro,given the seasonal variations in water discharge in rivers, might be tocombine mini-hydro/diesel station operations with a view to saving ondiesel consumption whenever sufficient river flows are available for gen-eration. This option should be investigated by LEC.
2.20 In 1978 a rural electrification scheme was developed andproposed by the Electricity Supply Board of Ireland (ESB) to electrifythe lowlands, 1/ particularly the western part known as the BasicAgricultural Services Program (BASP) area. The proposal was to establisha Basic Rural Network (BRN) connecting some 388 premises in the BASP areato the LEC transmission system. The spider network forming the BRN wouldprovide 1,337 kilometers of 11-kV lines, feeding 388 premises withelectricity through a step-down transformer (Table 2.9). In addition- to
1/ Rural Electrification in the Kingdom of Lesotho by ElectricitySupply Board of Ireland, July 1978.
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these premises, connections -rom the BRN to about 1,000 villages withinone km of the 1l-kV lines wqere also proposed. 1/ The larger villageswere to be supplied from one or more 15-kVA single phase transformers,while 5-kVA transformers were to be used for smaller villages. In 1978prices, LSM5.75 million (US$ 5.31 million) was required to establish the11-kV network, and LSM11.7 million (US$10.8 million) to supply targetvillages in the BASP area. 2/
2.21 The Government has not as yet taken a decision on this scheme.However, a RE project in the Hololo Valley was commissioned in 1979. Aspider network consisting of: 25 km of 11-kV lines and 10 sub-stationswith transformers was constructed from LEC's 88-kV transmission line(from Hendrick's Drift in the north) to connect loads in the HololoValley. The main loads are an agricultural development project, anirrigation project, the St. Charles Hospital, about three schools, andthe St. Peter's Mission. A few commercial enterprises and households innearby villages in the valley have also been connected but the responsehas been far below expectations. Through negotiations with ESCOM (RSA),LEC was able to establish a second RE pilot project at Peka village.This project, commissioned in 1982, taps power through an 11-kV lineconnected to ESCOM's grid at the Peka Bridge border point. The mainloads are a water supply plant and several consumers in Peka village.
Table 2.9: Proposed Connections to the BRN
Institutions Number Purpose
Clinics 30 Refrigeration/SterilizationSecondary Schools 29 Lighting/Teaching AidsMission Primary Schools 54 LightingAgricultural Service Stations 12 LightingRural Trading Stores 133 RefrigerationVillage Water Supply Pumps 120 Electric PumpsPolice Stations 10 Radios
Source: LEC
1/ There are approximately 4,600 villages in the BASP area. About 75%of them are within 5 km of the proposed BRN, and 25% within 1 km.
2/ For estimating costs, ESB assumed an 80% acceptance level for REsupplies in the targeteed villages.
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2.22 In the Mission's view, the economic justification for ruralelectrification on the scale proposed for the BRN has not beenestablished. A large-scale rural electrification does not appear to be apriority vis-a-vis other programs (water supply, food production,reforestation, and feeder roads) for developing rural areas in Lesotho.The experience with the Hololo Valley scheme suggests that the demand forrural electrification is low. The cost of the entire program, therefore,cannot be recovered from the 388 institutions that form the basic load ifthey are to pay comparable tariffs to urban consumers. The Missionrecommends that GOL approach such a program with great caution.
Traditional Energy Sources
2.23 Supplies Traditional fuels for the majority of the ruralBasotho are derived from local vegetation and agricultural residues. Thecountry has been almost treeless 1/ for several decades and hence dry cutfuelwood 2/ has had to be imported from the RSA. In general, traditionalfuel supplies are derived from:
(i) Fuelwood: about 35,000 tonnes of wood are imported each yearfrom the RSA for urban requirements. The main importers 3/sell it wholesale to a network of 'wood and coal' merchantsin the urban centers. Rural supplies are obtained from woodyshrubs 4/ or brushwood known as Patsi. A recent survey ofthe Mokhotlong District indicates that in areas with accessto brushwood, annual consumption is about 1.5 tonnes for ahousehold of five persons;
(ii) Animal Residues: dung is widely used as a fuel in ruralareas and is estimated to supply more than 40% of ruralenergy consumption. The preferred source is cow dung whichis obtained from livestock kraals, either as dried chunksknown as lisu, or as dung briquettes known as mapharoa.Households that do not own cattle gather and stockpile dungin bags, known as khapane, from the fields during the drywinter season for use in summer. Households with sufficientlivestock and supplies of dung use about 1.35 tonnes a yearif they rely almost exclusively on dung as fuel;
1I/ The remaining tree cover is scanty and generally confined to a fewrows along rivers.
2/ Excludes 'fuelwood' derived from wood shrubs, etc.
3/ Cooperative Lesotho Limited, Kuo M.D. Thomas Wood and Coal MerchantsLimited.
4/ The shrubs include chrysocoma tennifolia, Pentzia cooperi, Nestleraacerosa usually found in foothills.
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(iii) Crop Residues: these are generally dried up stalks frommaize, wheat and other annual crops available for shortperiods after the harvest season in the lowlands. They areused to supplement patsi and dung.
2.24 Several recent surveys 1/ have shed some light on rural con-sumption patterns in parts of Lesotho. However, in the Mission's view,the scope and coverage of these surveys is not extensive enough to pro-vide a reliable basis for estimating total rural consumption of tradi-tional fuels. The rural sector is clearly deficient in fuels for cookingand heating, 2/ and there is a need to develop supplies and/or introduceappropriate sFubstitutes for traditional sources. The Mission reviewedtwo options for increasing rural energy supplies through: (i) refores-tation to increase supplies cf fuelwood; and (ii) biogas production as ameans of increasing the energy yield from dung while retaining its use asa soil conditioner.
Fuelwood Prices
2.25 The price of fuelwood varies from district to district according
to its availability and the haulage distance from Maseru and other pointswhere supplies are brought in from the RSA. The price of dry cut woodfrom the RSA is reported to be about LSM20/tonne, excluding haulage coststo depots in Maseru. Importers estimate that the landed cost is aboutLSM34.00 per tonne, including railway freight charges (about LSM14e00 pertonne). The wholesale merchants distribute the fuelwood through anetwork of "wood and coal" retailers in the urban centers and in townsalong the main trunk roads. In May, 1983, retail prices in Maseru wereabout LSM2.0 per headload of 30 kg. Retail prices are generally about30-50% higher inland due to i:he relatively high unit transport costs inthe country. There is little commercial trading of traditional fuels inthe rural areas. Chunks of ,zow dung or lisa are reportedly sold duringcertain months, and the price recorded during a recent survey ofMokhotlong was high (LSM2.5 per bag of 30 kg). Woody shrubs (patsi) aresold at about LSM1.00 per 20 kg bundle. Wholesale prices of fuelwoodobtained locally from the Woodlot Project (3.21) are low, albeit at asubsidized LSMO.30 per head load of 30 kg. This price is being increasedto LSMO.50 to bring it in line with market costs. Fuelwood productionfrom the Woodlot Project could in the long run reduce the country'sdependence on imported fuelwood from the RSA. From a security of supplystandpoint, the Mission supports the Project's proposal to do a marketing
1/ Reports from surveys include: Domestic Fuel Sources and ConsumptionPatterns in a Lowlands Village of Lesotho', by Judith Gay in October1978, 'Village Energy Survey Report' by Judith Gay and MamelloKhoboke in November 1982, and 'The Scarcity of Domestic Energy:A Study in Three Villages' by Marc Best, SALDRU working paper 27,November 1979.
2/ There are usually more than 100 nights of frost between June andSeptember, and snow occurs in the mountains.
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study to determine the logistics and competitiveness of supplies from thewoodlot project in urban centers.
Coal
Import/Consumption
2.26 Coal imports between 1975-1981 are shown in Table 2.10. Twomajor importers 1/ supply coal for six months in the winter season (Aprilto September) to government departments (15%), hospitals (6%), the com-mercial sector (76%), and local industries (3%). The Lesotho Paramili-tary Force (LPF) imports two truckloads 2/ of coal a month for its ownuse. Households get their supplies from commercial traders (retailers)and some small direct importers.
Table 2.10: Coal Imports (1975-1981)
1975 1978 1981
Quantity ('000 tonnes) 56.3 58.8 72.3
Import cost FOB a/(LSM/tonne) 5.3 7.7 10.1
a/ Annual import FOB prices weighted by quarterly importquantity to quarterly import prices.
Sources: Statistics Department, GOL.
Coal Prices
2.27 Current wholesale prices for coal in Maseru are LSM27.075/tonnec.i.f. which includes LSM14/tonne for transport. The high cost of trans-port to Maseru (from coal pits in the RSA) coupled with limited railcapacity constrain demand growth. Coal is retailed in 70 kg bags atLSM4.60/bag (for pickup) and LSM4.80/bag (delivered to a household in
1/ The main importers (wholesale) are Coop Lesotho Limited and Kuo M.D.Thomas (wood and coal) merchants.
2/ One truck carries 35 tons.
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Maseru). 1/ Coal use has increased at the rate of 7.1% a year since1978. The Mission projects coal demand to increase at 3.6% a year until1990, with total coal imports of 99,000 tonnes. This level of importswould cost Lesotho LSM2.7 million (in 1983 prices).
Summary
2.28 The Mission's overall projections of commercial energy demandbetween 1981 and 1990 are shown in Table 2.11. These projections are notsophisticated and can be improved significantly. However, in theMission's view this is not critical as no major investment decisions inthe energy sector are be be made until 1990. In the long run, commercialenergy demand will increase at about 5.0% a year. Lesotho will remainalmost exclusively dependent on energy imports (mostly on the RSA)because indigenous energy options cannot be developed and brought on-stream, if at all, before the mLd-1990s.
Table 2.11: Projected Commercial Energy Demand('000 toe)
2.29 Aside from support needed to address the balance-of-payments im-plications of meeting the costs of projected energy demand through 1990,GOL would need external assistance to upgrade the institutional andmanpower capability for monitoring and managing energy sector activitiesand identifying possible indigenous energy sources for development. TheMission therefore recommends that external assistance be used to developthe manpower and institution building functions (Chapters III and IV).
1/ The coal retails at about LSM65.71/tonne, compared to a FOB cost ofLSM10.10/tonne and a landed cost of LSM27.08/tonne. As coal ischeaper (about LSM40/toe) t:han fuelwood (LSM571/toe), efforts shouldbe made to remove the conslraints to importing coal to encourage itsuse as a substitute for fuelwood.
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III. ENERGY RESOURCE DEVELOPMENT ISSUES
Overview
3.1 Lesotho's energy resource endowment for the medium term is quitemodest. The country's major resource is hydroelectricity, and the tech-nically exploitable potential is estimated at about 2,000 GWh/year (450MW). However, the cost of harnessing this potential is high because ofthe lack of natural heads and erratic seasonal flow patterns; it willtake many years to develop and will depend on assurances from the RSA tobuy water from these projects. The hydrocarbon potential has not beenadequately investigated, and coal occurs only in thin seams of low qua-lity. Fuelwood is in short supply because Lesotho is almost treeless,and there are substantial difficulties in natural reforestation under theharsh climatic conditions and the mountainous terrain. There may also bedifficulties in harnessing other new energy sources because of the largeseasonal variations in solar and wind energy patterns. Solar insolationlevels vary from a daily peak of about 675 cal/cm2 during mid-summer to adaily low of 300 cal/cm2 in mid-winter. 1/ The wind regime over Lesothois strong and erratic in summer and weak in winter. In the Mission'sview, these energy resources will, at best, only make a marginal contri-bution in the mid-1990s, assuming a systematic investigation of theseresources and the preparation of viable projects for development.
Large Hydropower Options
3.2 The large hydro energy potential is based primarily on the gen-eration potential of the Senqu (or Orange) and the Senqunyane Rivers.Existing proposals focus on developing these sites as multipurposeschemes, 2/ the two most advanced proposals being the Lesotho HighlandsWater Project (LHWP) and the Jordane Project. However, developing alarge hydropower scheme involves long term regional (resource and market-ing) issues, as well as relations with, and policies of, the RSA. Sincethis resource may be of major benefit to Lesotho in the longer term, theschemes are discussed in some detail here.
Lesotho Highlands Water Project (LHWP)
3.3 Since the early 1950s, several configurations of the LHWP havebeen developed. All configurations include the export of large amountsof water to the RSA. The GOL and the RSA set up a Joint TechnicalCommittee in 1978 to plan for the LHWP. The Committee reviewed all 20configurations of the LHWP, and adopted one (IBRD Map 17308) for more
1/ The daily duration of sunshine also varies from 10 hours in mid-summer to slightly under 8 hours in mid-winter.
2/ For town water supply, irrigation, and power generation.
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detailed feasibility studies. This configuration is based on a fivephase approach to developing the scheme for multiple power and non-poweruses (Table 3.1).
3.4 During Phase I, a dam with a full supply level of 2,130m wouldbe built on the Malibamatso River at Pelaneng. Power during this phaseshould be generated at station, to be installed at Pelaneng (20 MW) andat Tlhaka (40 MW). Altogether, about 8 m3/sec of water would be divertedinto the RSA during this phase. During Phase II, scheduled to be commis-sioned four years after completion of Phase I, the Soai dam, located onthe Malibamatso River downstream from Pelaneng, would be built. The fullsupply level would be 2,010m above sea level, and another 10 MW would beinstalled at Pelaneng. In Phase III, commissioned eight years afterPhase I, the Polihali dam would be built on the Senqu River at a fullsupply level of 2,050m above sea level. A dam would also be built atOxbow on the Malibamatso River and water would be tunnelled to the LalaPower Station where two units totalling 60 MW would be operating on a nethead of 60m. In Phase IV, which would be commissioned 12 years after thecompletion of Phase I, a dam would be constructed at Taung on the SenquRiver, downstream from the Malibamatso confluence. The full supply levelwould be 1,850m above sea level. Water would be pumped into the Soaireservoir. Due to the pumping, the net amount of energy available forconsumption elsewhere in Lesotho or for export would decrease in compari-son to phase III. Another 30 MW unit would be installed at Lala. InPhase V, which would be commisSioned 19 years after Phase I, another 30MW (1 unit) would be installed at Lala, bringing the total installedcapacity at the Lala station to 120 MW. The total amount of water ex-ported would reach 35 m3 /sec.
Table 3.1: LHWP - Phased Development
Phase I Phase II Phase III Phase IV Phase VYear T a/ T + 4 T + 8 T + 12 T + 19
Source: MWEMIN, based on report by Consultants, Binnie and Partners,London, U.K.
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3.5 The total cost of the LHWP is estimated at LSML.230 billion orUS$1.174 billion (1982 prices), 40% of which is required for Phase I.The EEC proposes to finance a detailed feasibility study, the imple-mentation of which will begin after consultants are selected in mid-
1983. The Mission recommends that this study give explicit treatment tothe following: (i) identifying and quantifying the distribution ofproject benefits between Lesotho and the RSA; and (ii) investigating theoptions available to Lesotho for developing a separate power scheme underthe LHWP. The Mission believes the LHWP benefits to Lesotho should bederived from earnings fron water exports to the RSA, 1/ and savings basedon the long-term shadow cost of power purchases from ESCOM. These bene-fits are currently estimated using different assumptions to be aboutLS350 million a year. 2/ The Mission also recommends that GOL notundertake financing of the LHWP on its own. As regards the developmentof a separate power scheme, the viability of a scheme based on Lala whichhas the potential for producing 100 GWh/year from 120 MW of installedcapacity should be investigated.
The Jordane Scheme
3.6 Two schemes, known as the Jordane-Phiring scheme and theJordane-Lehobos scheme, were identified in 1977. These schemes involvethe diversion of water from a dam across the Senqunyane River throughtunnels to the western lowlands. A slightly different configuration ofthe scheme, later identified as the Jordane-Machache scheme, is currentlyreferred to as the Jordane Scheme (IBRD Map 17308). The Jordane Scheme,which would have an installed capacity of 3 x 14 MW and an energy outputof 155 GWh/a, is expected to cost LSM106 million or US$101 million (in1981 prices).
3.7 The feasibility of the Jordane scheme was further investigated
with the assistance of HYDROPLAN consultants, financed under a WestGerman aid program. Altogether, the consultants studied four alternativelayouts with energy production potentials between 180 GWh/a and 212GWh/a. 3/ In one layout, three 12-MW units are to be installed with anannual energy producton of 180 GWh.
1/ Demand for water in the Pretoria-Witwatesrand-Vereeniging-Sasolsburg(PWVS) area of RSA up to 1992 can be met with supplies from the Vaaland Olifants Rivers of RSA. The PWVS area will need extra suppliesafter 1992 and one option is importing water diverted as part of theLHWP. About 35 m3/sec will be required by RSA.
2/ Base costs are estimated to be LSMO.03/kWh for electricity andbetween LSMD.08 and 0.09m3 for water exports to the RSA. Theestimates were discounted at 8.0% p.a.
3/ See the "Pre-feasibility Survey for the Jordane Milti-purposeScheme", December 1981, by HYDROPLAN.
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3.8 The water transferred to the lowlands under the Jordane Schemecould also be used for other purposes, such as irrigation in areas aroundthe Little Caledon River and for water supply in Maseru. 1/ As Maseruonly would need about 1.5 m:/sec of water, the remaining 6.5 m3/sec ofwater would augment the flow in the Caledon River to meet requirementsfor irrigation water sales (export) into the Orange Free State. TheJordane scheme therefore could serve four purposes: hydropower, irriga-tion, water supply within Lesotho, and water export to RSA. The totalcost of the scheme for hydropower, irrigation and water supply to Maseru,but excluding exports to RSA is estimated at LSM316 million or US$302million (1981 prices). When all non-power benefits are excluded from theestimates, the resulting energy cost is about LSMO.17/kWh. The extrabenefits of the Jordane Scherie resulting from water supply to Maseru andirrigation are relatively marginal. In the Mission's view, the hydro-power component of the scheine looks promising for the long-term (mid-1990s), given that projected. power demand would only be about 210-312GWh. The Government has approached AfDB for future financing of thescheme.
Table 3.2: Multipurpose Hydro Schemes
MeanAnnual Installed Cost-Jan. 1984
Project River Production Capacity Prices,(GWh) (MW) LSM million
a/ Prefeasibility study funded by EEC and UNDP has been completed. De-tailed feasibility study to begin in mid-1983.
b/ Prefeasibility study dorLe by HYDROPLAN of the Federal Republic ofGermany.
c/ See Table 3.1.
Source: LEC
1/ Because the mountain water is cleaner, the cost of water treatmentwould also be lower.
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Mini-Hydro Options
3.9 The Government also recognizes the potential role of mini/microhydropower plants in reducing the dependence on diesel generators inareas remote from the LEC transmission/distribution network. Mini/microhydro schemes could be of the run-of-the-river design, as previously usedby some church missions in the country. 1/ Three bilateral agencies haveresponded to GOL's request for assistance by sending teams to investigatesome sites in the highlands and lowlands. The results of theseinvestigations are presented below.
Mini-hydro in the Highlands
3.10 In 1980/81, SOGREAH conducted a reconnaissance survey of ninemini-hydro sites in the Lesotho Highlands (far from the LEC grid) withFrench aid (Table 3.3). A number of sites were selected for furtherstudy and development: Tlokoeng, on the Khubelu River close to the townof Mokhotlong, would have an installed capacity of about 700 kW, utilizea 50m head and generate about 3.4 GWh/year; 2/ Motete, on the MoteteRiver close to the diamong mine at Kao, would yave an installed capacityof 524 kW, utilize about 30m head and produce about 2.5 GWh/year; andQacha's Nek, located on the Tsoelike River close to the town of Qacha'sNek, would have an installed capacity of about 482 kW, utilize a head ofabout 30m and generate 2.6 GWh/year. In the Mission's view, a carefulreview of each scheme is needed before LEC makes any firm decision on howto proceed with the projects. The Mission also recommends that thecompetitiveness of mini-hydro power generation at each site be determinedvis-a-vis isolated diesel generation before making a decision to con-struct the projects.
Mini-Hydro in the Lowlands
3.11 The Taiwan Power Company studied 12 different mini-hydro sitesin the lowlands during 1981, and selected the two most promising sitesfor further investigation: Pitseng in the northwest, which would have aninstalled capacity of 70 kW, use a head of 9m to produce 0.32 GWh/year,and cost about LSMO.36 million; and Ha-Ntsi, in the middle of the low-lands, which would have an installed capacity of 30 kW, and use a 9m headto generate 0.08 GWh/year. The estimated unit generation costs for theseschemes would be about LSMO.10/kWh and LSMO.23/kWh, respectively. Bothof these project sites are located fairly close to the national grid;therefore their competitiveness with cheap power supplies from LEC should
1/ Church mission at Roma, Semonkong, and Matsieng used mini-hydroplants until recently.
2/ The Tlokoeng hydropower station will be impounded in Phase II ofLHWP by building the Polihali reservoir, while the other two schemeswill not be affected by LHWP.
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be determined, taking into aczount investments in transformer substationsand transmission lines for small extensions to the grid such as would berequired under the BRN.
Table 3.3: Mini Hydro-electric Projects
Inst:alled Firm Mean AnnualCapacity Capacity Production
Pitseng Tsainyane 70 0.32 ) PrefeasibilityHa Ntsi Liphiring 30 0.08 ) study done by
) Taiwan Power Co.
Letseng Quthing 1,800-7,000 -undetermined- ) Identificationand Lestsie ) study funded
) by Austria
Source: MWEMIN
Small Hydro Sites near Quthing
3.12 The Institute of Water Management (IWM), Austria, investigatedtwo sites near Quthing in southern Lesotho. These sites have high headsof between 4 00-500m, but very little water discharge. The IWM teamestimates that a total of about 7 MW can be installed, although estimateson power/energy production costs have not yet been provided. In theMission's view, these project, would, at best, be marginally economic.
Hydrocarbon Prospects
Petroleum
3.13 GOL is interested in promoting the exploration of sedimentaryformations in the Upper and Lower Ecca Series which are known to havesome potential for accumulatilng hydrocarbons. In 1972, the GOL, acting
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through the Lesotho National Development Corporation (LNDC) signed anexploration agreement with Westrans Petroleum Company of New York, USA,1/ for a concession covering about 17,000 sq. km (about five percent ofthe country) in three basins in the western and southern lowlands:(i) Mahobong in the Leribe District; (ii) Mazenod in the Maseru District;and (iii) Taung in the Mohale's Hoek District. In early 1973, WestransPetroleum contracted a subsidiary of Hunting and Associates to interpretsome photo-geological information and a map of existing air photos ofthese parts of Lesotho. The results of this study 2/ indicated favorableconditions for geophysical exploration work, and Westrans was contractedfor short gravity and magnetic surveys in three structural areas.Limited gravity and magnetic surveys 3/ were done for about six weeksduring early 1974. Later, in September 1974, a 5,421 foot well wasdrilled at Mahobong to test one of the structures. There were no signi-ficant oil or gas shows, and the well, Mahobong-1, was plugged and aban-doned as a dry hole in July, 1975. Westrans, by then acquired by Elf-Aquitane (France), relinquished the concession in late 1975. The Govern-ment believes that: (i) the hole was not sited on a structure; (ii) noconclusions can be drawn from just one well; (iii) so far only limitedseismic work has been done around the area; and (iv) there is currentlynot enough evidence on which to base any conclusions on Lesotho's hydro-carbon potential. The Mission therefore reviewed available reports sub-mitted by Aquitane-Westrans 4/ to determine the merits of furtherexploration.
3.14 Tests on recovered core samples showed no good sourcebeds andonly one sandstone with marginal reservoir quality. Igneous rocks(dolerite, etc.) make up over 15% of the total well thickness. The wellwas almost continuously cored, with a small diameter hole. With a three-inch casing set at 3,260 feet, the bottom 2,200 feet of the hole was only
1/ Westrans was later acquired by ELF Acquitane.
2/ See Report on Photogeological Mapping in the Northern, Western andSouthern Parts of Lesotho by R.F. Loxton, Hunting and Assoc., August1973.
3/ The surveys consisted of cross lines over each of three prospectsfor a total of 60 kms and one longer regional line of 93 kms, but noseismic work was done.
4/ A review of a Gravity and Magnetic Survey of Northern, Western andSouthern Lesotho by F.A. Gibson, Apr:Ll 1974; Geological Study ofCore Samples from Mohobong-1 Westrans-Lesotho, by DepartementResearches en Geologie, Societe Nationale Des Petroles D'Aquitane,October 1974; and Well Completion Report for Mahobong-1.
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2 inches in diameter. 1/ The section penetrated in the well was, asexpected, all Karroo formation, a series of non-marine sands, shales, andsiltstones, of Permian to Triassic age. 2/ It also had been hoped thatthe Mahobong-1 would locate a good sandstone reservoir next to organic-rich shale source rocks but such favorable rock facies were not encoun-tered. In addition to a discouraging sedimentary series, the sectioncontained several igneous layers totalling 840 feet in thickness, two ofthem 300 feet thick and the others ranging from 20 to 125 feet. Over 30%of the bottom half of the well, where the objective horizons are located,is igneous and, in fact, the well bottomed in a thick dolerite. TheMission agrees with GOL that: (i) the well may not have been drilled ona structure or, at least, not on the high point of a structure; and(ii) the photo-geological and gravity-magnetic work done before selectingthe location of the well was insufficient to assure the identification ofan optimum location. 3/ It may be of interest for any new explorationcompany to spend US$1-2 million to do a complete air magnetic survey ofthe area before proceeding to drill a well which might cost US$6-10mil lion.
3.15 In the Mission's view, the available data clearly show that the
geological section lacks marine beds for oil source rocks and that thenon-marine shales are not thick enough or rich enough in organic contentto generate gas, as are sonie such shales. Furthermore, the prevalence ofthick igneous intrusions (dolerites and basalts) is also detrimental tothe preservation of any hydrocarbons which might have been formed, aswell as being a hindrance to the interpretation of geophysical work.Finally, the rough terrain over much of the area would make seismic workdifficult and expensive, and drilling costs would be high because of thecountry's isolation. The GOL is eager to promote petroleum explorationand asked the Mission if assistance could be provided to the Departmentof Mines (MWEMIN) for preparing a promotional package. This technicalassistance would include: (i) a petroleum legislation specialist to re-view and revise the legislative framework which is contained in theMining Rights Act of 1967; and (ii) an experienced geological consultant
1/ This is the type of drilling done in South Africa mining operationsand is not normally tried for oil exploration. The 334-day drillingtime would be unacceptably slow to any present-day oil company.
2/ This series is widespread and underlies much of southern and easternAfrica, including Madagascar and the Seychelles. The series is notan oil or gas produc,sr in any area, though it contains major tarsand deposits and some non-productive heavy oil and seeps inMadagascar.
3/ It is not good practice for oil companies to drill wells based ongravity and magnetic data alone; seismic surveys are almost manda-tory before drilling Expensive deep wells.
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(3 or 4 man-months) to review all existing data 1/ and prepare thenecessary maps and a good well log of Mahobong-1. A statement of conces-sion terms and fiscal regulations also needs to be prepared and madeavailable by the LNDC. Apparently, GOL has made a request for technicalassistance along these lines to the French Government (1982) and toPetro-Canada (1983). The Mission supports this initiative by GOL andrecommends that GOL further pursue such requests.
Coal and Peat Deposits
3.16 A recent UNDP survey has ruled out the prospects for economicdeposits of coal in Lesotho. Several narrow seams of coal which havebeen located within Lesotho are essentially outcrops from the Beaufortand Stromberg series which originate from the RSA. The Stromberg seriescontains thin and unpersistent views of coal in the Mohale's Hoek,Mafeteng, Qacha's Nek, Maseru and Leribe districts, over a belt 150 kmlong and 35 km wide which extends from north to south Lesotho. Thethickest vein in this belt is estimated to be about 15cm, with coalquality varying from poor to good grade bituminous. The prospects fordeveloping these coal deposits are remote. Peat deposits occur at Mothaein the mountainous areas of the Mokhotlong district. These deposits aresmall and are deposited as a sponge overlying a bed of kimberlite. Thepeat is of low quality and high ash content, and exploitation of thedeposits may have undesirable environmental consequences and possiblyaggravate soil erosion in the vicinity. Peat is therefore considered amarginal energy resource.
Supply of Cooking Fuels
Fuelwood and the Woodlot Project
3.17 GOL entered into a joint venture with Anglo de Beers (RSA) andthe UK-ODA in 1973 to develop fuelwood supplies through a WoodlotProject. 2/ The main objectives of the project were:
1/ Any optimistic data available from RSA should also be included inthe package. However, the GOL should not expect much of a positiveresponse from the industry. East Africa generally is not perceivedas an attractive area, and almost all the other countries(Mozambique, Tanzania, Madagascar, Somalia, etc.) have betterstratigraphic sections than Lesotho. Those sections are betterbecause they have thick upper Mesozoic (Jurassic and Cretaceous) andTertiary sequences to work with in addition to the underlying Karrooseries. Most of them do not have as serious an igenous problem asLesotho does.
2/ Several new reforestation schemes have been proposed, and funding isbeing sought from SIDA, GTZ and the African Development Bank.
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(i) to establish woodlots throughout the country for fuel andsmall building inaterials;
(ii) reintroduce trees for water and soil conservation;
(iii) determine a rational afforestation policy for the country;
(iv) establish a Forest Service within the Ministry of Agricultureand Marketing; and
(v) train Basotho nationals to assume responsibility for theoperation of a Forest Service.
The project was to be implemented over a period of 12 years starting in1973, but UK-ODA has indicated to GOL its willingness to extend the proj-ect life to 20 years. The Mission supports this move and recommends thatGOL continue to support the project for the extension.
3.18 The Mission's review of implementation shows that the projecthas made significant progress on two fronts: (i) developing a technicalpackage for replanting in the lowlands; and (ii) securing more land fortree planting. The project. has, through experimentation, identified twoeucalyptus species (the E. rubida and E. bridgesiana) which have with-stood the harsh climatic and growing conditions in the lowlands. 1/About 3,600 ha have been planted in some 225 separate woodlots and plan-tations 2/ in the western lowlands. The technical package for refor-estation in the lowlands includes soil preparation by complete ploughingor ripping, followed by the application of fertilizers. The basis forestimating the establishment costs for these woodlots needs to be clari-fied. 3/ In the Mission's view, actual costs are likely to be higher ifindirect labor costs were included. Currently, some of the labor isremunerated in the form of food rations provided in lieu of daily wages4/ by the World Food Progran (WFP).
1/ Most of Lesotho is bare and mountainous (1500-3000m), and theclimate is not favorable for tree growth, as temperatures fluctuateseasonally from over 300C in summer to below freezing in winter.Frost occurs for several months each year and annual rainfall levelsare between 700mm and 1000mm. The eucalyptus species are not suit-able for the higher elevations (above 2000 meters).
21 Plantations are about 1600 ha each. Average yields are 7m3 /ha/year.
3/ Current estimates of woodlot establishment costs are approximatelyLSM 1000/ha.
4/ Valued by WFP to be about LSM1.40 per day.
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3.19 The Forest Act of 1978 and regulations of 1980 give legalprotection to the forest estate and prescribe the procedure for creatinga Forestry Division to manage the forest reserves. The Land Act of 1979provides for the setting aside of land for afforestation but this optionof expropriation has not been applied. All land is thus offered freelyby villages. The difficulty of accelerating the planting program stemsfrom the slow process of persuading each village of the advantage ofhaving a woodlot. The number of foresters available to meet the vill-agers is a constraint to the rate of land acquisition. One incentive tovillagers to release marginal land is made by promising to return 20% offuture revenue to be used for community development. In the Mission'sview, the lack of local foresters and a forestry service remains the mainconstraint to reforestation in Lesotho.
3.20 There is potential for replacing the imports of fuelwood withlocal production, and the Mission recommends that the feasibility ofusing the output from the project to replace fuelwood imports from theRSA be studied. The landed cost in Maseru of fuelwood from the RSA 1/ iscurrently about LSM35-40/tonne (retail price is LSM100/tonne), which isconsiderably higher than the current selling price of LSMlO/tonne forfuelwood obtained from the woodlot project. The Mission supports theWoodlot Project proposal to do a fuelwood marketing study to determinethe production costs and how best to arrange wholesale distribution ofproducts from the woodlots to urban retail enterprises or centers such asat Maseru, Mafeteng, and Mohale's Hoek. The Mission was informed that arequest had been made to USAID for technical assistance for the marketingstudy.
Biogas Production
3.21 One promising approach being investigated in Lesotho as a meansof upgrading the energy yield from the dung project is biogas produc-tion. Biogas could also enhance the quality and availability of theresidues (sludge) for improving soil fertility. GOL has recognized thepotential of this approach and is supporting a pilot project on BiogasProduction Systems as part of its program with UNDP. 21 The project, nowin the second year of implementation, has already made significant pro-gress on two fronts. First, results with existing units indicate thatunderground biogas generators can produce year-round despite the frostconditions in winter, and second, training programs for local personnelin biogas production have received the backing of staff and students ofthe National Univeristy of Lesotho (NUL).
3.22 A six cubic meter underground Chinese dome digestor has, despitethe cold winter conditions, continued to produce between 0.9 to 1.2 m
1/ Brought in by rail from RSA at a freight charge of about LSM15/tonneof dry cut wood.
2/ UNDP Project LES/81/TO1 with UNESCO as Executing Agency.
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gas 1/ a day for the cooking needs of two families on the Campus of theNUL. Two larger projects are underway: (i) one at the Christ King HighSchool where a 20 m3 Chinese dome digestor is under construction. AboutUS$800-1,000 has been spent on materials and the digestor is expected toyield 5 to 6 m3 of gas a day, (based on a feedstock rate of 150kg perday), thereby substituting fc,r one 50kg LPG cylinder each month; (ii) theother at Ha Ralejoe village, where two 10 m Fry displacement digestorsare being constructed to supply gas for a community kitchen serving about14 households. The two digestors are using about US$2,000 worth ofmaterials and are expected to provide between 10 to 20 m3 of gas a day.Similar schemes are underway at Mohale's Hoek, Mafeteng Bereng HighSchool, the St. Mary's High School, and the National Teachers TrainingCollege (NTTC) near Maseru. Current plans are to standardize units forschools at about 6 m3 and tc, investigate the viability of smaller unitsfor rural households. However, the application is only relevant to areaswhere the animals are stabled and no large-scale gathering of animalwaste from grazing grounds is required. In the Mission's view, althoughthe program shows promise, it is too early to assess the medium- to long-term impact of an expanded biogas program on the rural energy situation.The Mission recommends that the MWEMIN be given a greater role in moni-toring implementation and cost effectiveness of the biogas projects.
Special Energy Options
3.23 Several ministries have recently commissioned projects to inves-tigate the scope for using renewable energy technologies in their pro-grams. The Ministry of Education (ME) and UNESCO are jointly sponsoringa Solar Energy and Biogas Production Project 2/; the Ministry of Cooper-atives and Rural Development: (MCRD) is promoting windmills for pumpingwater in the Village Water Supply Project (VWSP), and solar technologiesand improved stoves in the Lesotho Renewable Energy Technology Project(LRET), 3/ which is jointly sponsored by USAID. Both Ministries areinterested in promoting passiLve solar heating techniques in constructionprojects, but such investigations are at a preliminary stage.
3.24 The main achievement of the RET Project has been the developmentof several efficient versions of the local stove, the Paola, and fieldtests should begin fairly soon to determine local acceptance of the de-signs. Other applications such as solar water heaters and crop
1/ The digestor requires 40 kg of feedstock a day. This output isquite low.
2/ UNDP Project No. LES/81/TOl - Development of Solar Energy and BiogasProduction.
3/ USAID Project AFR-0206-C'-00-1016-00. The first year Annual Reporton the Lesotho Ret was issued on May 31, 1982.
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dryers 1/ have been developed to the prototype stage using locallyavailable materials. Some of the large Southern Cross windmillsintroduced to pump water from boreholes are no longer operating becauseof inadequate maintenance. Several telecommunications stations andpolice outposts have been equipped with solar photovoltaic power kitswith replaceable batteries. The World Health Organization (WHO) proposesto install a few solar photovoltaic units in rural clinics on a pilotbasis. The Mission believes most of these initiatives are too recent yetto draw any conclusions. Greater attention needs to be placed oncoordinating and monitoring these activities, with a view to appraisingtheir technical and economic viability on a more consistent basis. TheMission believes that the Energy Planning Unit (EPU) in the Ministry ofWater, Energy and Mines (MWEMIN) is best suited to take on this role.
1/ CIDA also funded the development of solar crop dryers as part of theRural Technology Program in Lesotho.
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IV. INSTITUTIONS AND TECHNICAL ASSISTANCE
Energy Institutions
Energy Planning and Administration
4.1 The Ministry of Water, Energy and Mines (MWEMIN) was establishedby the Government in 1978. An Energy Planning Unit (EPU) has beencreated recently within MWEMIN to assume responsibility for all mattersrelating to the production, distribution, storage and use of all forms ofenergy including the generation and distribution of electricity. TheEPU's immediate objective is t:o assist in the preparation of an appro-priate energy policy and program for Lesotho. However, MWEMIN/EPU lacksstaff to perform these functicns. The Government recognizes this situ-ation and has recently approved an organizational structure and staffingplan for the EPU. A team from the UNDP reviewed technical assistancerequirements for the EPU and proposed a two-year project to strengthenand improve the planning capabilities of the EPU. The Mission supportsthis view but believes the Government's first priority should be tolocate and recruit local staff to man various positions within the unitwith vital day-to-day operaticonal responsibilities, before embarking onthe proposed technical assistance program. Under the present arrange-ment, an undersecretary in the MWEMIN works as part-time head of EPU andalso takes care of day-to-day matters on an ad-hoc basis without thebenefit of technical or staff support. The Government recognizes thissituation and is trying to identify possible candidates for the unit.The Mission recommends that the core staff of EPU be put in place beforethe proposed program of technical assistance to ensure the involvement oflocal counterparts. The Mission also recommends that the EPU develop itscapabilities to take on the central role of coordinating renewable energyprograms, as discussed in Chapter III.
Electric Power
4.2 The Lesotho Electricity Corporation (LEC) is a parastatal corpo-ration I/ under the jurisdiction of MWEMIN. It has received substantialtechnical assistance and training support from the Electricity Board(ESB) of Ireland, using funds from the Lesotho/Ireland Aid Program. Thecurrent Managing Director and the Financial Manager are seconded underthis Program, and most of the key staff in areas such as administration,2/ construction, operation, and maintenance within LEC are expatriates.At the moment, the LEC performs its transmission and distribution func-tions efficiently and effectively. However, if and when the LesothoHighlands Water Project and Jordane schemes are developed, the LEC will
1/ LEC was established under the Electricity Act of April 1, 1969.
2/ LEC's billing system was computerized in 1980/81. Basotho staffhave been trained to operate the system.
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need additional expertise and manpower for hydropower generation. TheMission recommends that the LEC continue its program for developing localmanpower to: (i) replace the current expatriate staff; and (ii) in thelong run, upgrade the program to provide staff for new generationschemes. The Mission endorses LEG's long-term policy of absorbing one ortwo Basotho electrical engineers each year, and the attempts being madeto train the Basotho staff. In 1979/80, the then Deputy ManagingDirector attended a course on "Power Utility Manpower Planning & Train-ing" under the auspices of the Electricity Supply Board of Ireland(ESB). Two Basotho electrical trainees attended full time electricalcourses in a Regional Technical Institute in Ireland in 1979-81. Twomore persons are attending these courses and are due back at the end of1983. In 1979/80, the ESB provided personnel for on-the-job training ofstaff, particularly for linesmen on overhead lines construction work andjointers on modern cable techniques. Short term courses for local staffhave been arranged with electrical suppliers in the RSA for training ongenerating plant, metering equipment and fuse gear. A number of Basothostaff have also attended part time courses at the Centre of AccountingStudies in Maseru.
Forestry
4.3 A major objective of the Woodlot Project -- to establish aForest Service -- has not been realized. The Government therefore con-tinues to rely on the management of the Woodlot Project for generalforestry administration, despite the temporary nature of this arrangementas defined in the Forest Act of 1978. 1/ This arrangement was appro-priate when the Act was passed because: (i) there were no qualifiedBasotho foresters to form the nucleus of a Forest Service; and (ii) theWoodlot Project was the only major forest activity. Since then, severalnew forestry project entities have been proposed, creating a need toredefine the institutional framework for administering and planningforestry activities, such as projects to be financed by the AfDB, 2/SIDA, and the Government of West Germany. The Mission supports the pro-posal by FAO/AfDB to include technical assistance for reviewing thefunctions and responsibilities of various divisions or project entitiesof the Ministry of Agriculture and Marketing (MAM) 3/ as a basis forclarifying the organization and management of the large Forestry Project.
1/ See Temporary Provisions (section 20) of the Forest Act of 1978.The Woodlot Project is directly supervised by the PermanentSecretary of the Ministry of Agriculture and Marketing (MAM).
2/ AfDB is considering a US$8.3 million Conservation Forestry Projectwhich includes reforestation of 4,500 ha in the Mafeteng, MohalesHock, Quthing and Qacha's Nek Districts.
3/ Including the Soil Conservation Division, the Agriculture PlanningUnit, the Woodlot Project, Land Use Planning Project, and theFAO/SIDA Training Project.
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The GOL should now give top priority to establishing a Forestry Divisionwithin MAM. The Mission recomiends that the scope of this institution-building component of the proposed AfDB Forestry Project be expanded toestablishing a nucleus Forestry Division within MAM, rather than a smallproject implementation unit.
4.4 Significant progress has been made in training local fores-ters: (i) through the Woodlot Project, where 25 Basotho have completedsub-professional training in the RSA and Cyprus, one Mosotho has gradu-ated with a forestry degree from Aberdeen University in the UK and eightmore are under training; and (:Li) through the SIDA/FAO project 1/ whichis providing training for 6 graduate foresters, and 39 other foresters; 9and 30 at the diploma and certi.-icate levels, respectively. The proposedAfDB Conservation Forestry Project has made a provision for training twoadditional foresters at the graduate level and 15 foresters each at thediploma and certificate levels.
Other Responsibilities
4.5 Five international oil majors -- BP, Caltex, Shell, Mobil andTotal -- handle the supply, storage, and domestic distribution and re-tailing of petroleum products in Lesotho. The companies control a totalof about 113 retail service stations throughout Lesotho (Table 4.1). TheMission supports the Government-sponsored Service Station RationalizationPlan to improve the effectiveness and efficiency of distribution andmarketing petroleum products in all disticts of the country. However,the Mission does not see the need at this stage to restructure theinstitutional relationships for petroleum distribution and marketing.
Table 4.1: Petroleuam Retail Stations in Lesotho
------------------ Number of Stations----------------------Company Company Station Affiliated Station a/ All Stations
1/ The SIDA/FAO Forestry Training and Development Project is budgetedat US$4.5 million (2/3 SIDIA, 1/3 GOL) for a total of 66 months; itsobjective is to provide assistance in building an institutionalframework for forestry development.
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Implications for External Assistance
4.6 The Government of Lesotho continues to receive financial andtechnical assistance from multilateral and bilateral sources in a broadrange of energy fields. This aid has usually been arranged through aUNDP-sponsored donor conference; the next donor conference is scheduledfor early 1984. Multilateral entities supporting energy projects inLesotho include the EEC, the FAO, UNESCO and AfDB. Ongoing and proposedbilateral assistance programs include:
(i) Government of Ireland Aid Program: which, through theElectricity Supply Board of Ireland, provides managementplanning and operations support for the LEC, the BRN RuralElectrification Program, and support for training andmanpower development in the electricity subsector;
(ii) Government of Sweden Aid Program: which provided financingand technical support for reforestation projects and thetraining of forestry personnel through the Swedish Inter-national Development Agency (SIDA), and for hydropower inves-tigations through SWECO, the Swedish consulting group;
(iii) Government of West Germany Aid Program: which includes a
recent energy sector survey, the financing of detailed feasi-bility studies and investigations of the Jordane hydropowerscheme by HYDROPLAN consultants, and a proposed 4,000 hareforestation scheme;
(iv) U. K. Overseas Development Authority (ODA): which has fundedthe Woodlot Project since 1973 and is supporting forestrytraining programs at the graduate level for a few Basotho;
(v) Government of France Aid Program: which includes funding ofmini-hydro investigations of the eastern highlands by theconsulting firm, SOGREAH; and
(vi) USAID: which is supporting renewable energy projects andrural energy surveys as part of the Lesotho Renewable EnergyTechnology Project (LRET).
4.7 Other support for energy development has been provided by theGovernments of Austria and Taiwan. Considering that: (i) large hydro-power options such as the LHWP and Jordane scheme are not required before1990; (ii) rural electrification on the scale proposed for the BRN is nota priority for the 1990s; and (iii) fuelwood development will be tackledas part of an overall forestry/conservation strategy, the Mission esti-mates that the major investment required in the energy sector will beLSM3.4 million (US$3.2 million) for the LEC transmission system expansionprogram which is already underway. In the Mission's view, the primaryfocus of external support for energy development in Lesotho should betechnical assistance for institution building and manpower development.ABFOL manages the woodlot project.
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ANNEX IPage 1 of 1
Notes on the Energy Balance, 1981
CONSUMPTION PATTERNS
1. The sectoral consumplion of petroleum products is based on salesdata from three companies - BP, Caltex, Shell. The percent oftotal sales of petroleum products by sector as distributed byfive companies (including Total and Mobil) is assumed to be thesame as for the three companies.
2. Gasoline use in private automobiles is included in the domesticsector, diesel use in tractors is included in the agriculturalsectors; and diesel use in other automobiles is included in thecommercial/government: sector.
3. Coal consumption in the commercial/government and industrialsectors is based on sales data obtained from only one wholesaleimporter and merchant. The other wholesale importer is assumedto have the same coal imports and sectoral sales. LPF consump-tion is included in the commercial/government sector.
4. Power consumption data include imports only through Maseru andFicksburg Bridge, excluding imports via Hendrick's Drift.
5. The Letseng-la-Terai diamond mine consumed 6618.8 toe of elec-tricity in 1981. It was closed in October, 1982. This is notincluded in the balance as it uses power imported throughHendrick's Drift.
6. The sectoral consumption of electricity is based on the obser-vation that the percent of revenue generated in the industrialand commercial/government sectors is approximately equal to thepercent of power consumed in either sector.
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ANNEX II
Page 1 of 3
LEC: SCHEDULE OF TARIFFS AND CHARGES
The following tariffs became effective after January 1, 1983.
Tariff 1: Load Limiter Scale
For an installation where the maximum current takenat any one time is limited to 1 Ampere. The supply isunmetered and is subject to a fixed charge of LSM 5.0 permonth. This tariff is not available to new consumers.
Tariff 2: Domestic Scale
For the supply of electricity to premises used sole-ly for private residential purposes and to primary andsecondary schools. The first 300 units per month arecharged at LSM 0.066 per unit. All further units permonth are charged at LSM 0.046 per unit.
In addition, a fixed monthly charge is payable, cal-culated as follows: For the first one or two livingrooms, LSM 3.85 per month; for each additional livingroom, LSM 0.75 per month.
As regards Primary and Secondary Schools, the fixedcharge is based on the number of classrooms, offices,etc.
Tariff 3: General Purpose Tariff
For the supply of electricity to all installationsother than private residences/schools which have a demandof less than 50 kW for commercial purposes and less than25 kW for industrial purposes.
This tariff applies to most shops, offices, garages,workshops and churches. The first 100 units per monthare charged at LSM 0.13 per unit; all further units permonth are charged at LSM 0.0725 per unit.
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ANNEX IIPage 2 of 3
In addition, a fixed monthly charge applies. Theamount charged depends on the total floor area of theinstallation being supplied. There is a minimum chargeof LSM 5.50 per month and a maximum charge of LSM 78.00per month. Details are available from LEC offices.
Tariff 5: Co_mercial Maximum Demand
For consumers using electricity entirely or prima-rily for purposes other than industrial, and regularlyhaving a maximum demand, of 50 kW measured during any 30-minute period in the course of a meter reading period.
The following tariffs and charges apply:
Tariff 5c - A demand charge of LSM 8.9 per kW for all kW
of the maximum demand for each meter readingperiod with a minimum charge of LSM 200.00per month.
Tariff 5a - For all units consumed LSM 0.0483 per unit.
For major non-industrial consumers it may be desir-able or essential for supply to be given at high volt-age. All high voltage metering equipment costs are borneby the consumer and the following tariffs and chargesapply:
Tariff 5d - A demand of LSM 7.8 per kW for all kW of the
maximum demand for each meter reading period.
Tariff 5b - For all units consumed, LSM 0.0483 per unit.
Tariff 6: Inlustrial Maximum Demand
For consumers using electricity entirely or primari-ly for industrial purposes and regularly having a maximumdemand in excess of 25 kW measured during any 30-minuteperiod during the course of a meter reading period. Thefollowing tariffs and charges apply:
Tariff 6c - A demand charge of LSM 7.72 per kW for all kWof the maximum demand for each meter readingperiod with a minimum charge of LSM 190.00per month.
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ANNEX IIPage 3 of 3
Tariff 6a - For all units consumed, LSM 0.0412 per unit.
For major industrial consumers it may be desirableor essential for supply to be given at high voltage. Allhigh voltage metering equipment costs are borne by theconsumer and the following tariffs and charges apply:
Tariff 6d - A demand charge of LSM 6.72 per kW for all kWof the maximum demand for each meter readingperiod.
Tariff 6b - For all units consumed LSM 0.0412 per unit.
Tariff 7: Off Peak
For consumers who, at the discretion of the Corpora-tion and subject to its conditions, require electricalenergy during the Corporation's off peak hours. Thesupply is available for not less than 8 hours per daywhich is decided by the Corporation and subject toadjustment from time to time. All meter equipment costsare borne by the consumers. All units are charged at LSM0.0336 per unit.
