Lesotho Weighs Gradual Electricity Tariff Increases as Demand and Supply Costs Rise

The study estimates that existing tariffs will recover about M74, approximately US$4.48, for every M100, approximately US$6.06, needed to supply electricity in the 2026/27 financial year.

Electricity tariff reform in Lesotho is bringing a difficult household and business concern into focus: how to pay for a more reliable power supply without placing too much pressure on consumers. The Lesotho Electricity and Water Authority and the African Development Bank convened stakeholders in Maseru on 26–27 August 2026 to examine proposed changes to electricity pricing, drawing on research that points to a widening gap between what customers pay and what it costs to deliver the service.

Government representatives, energy sector institutions, technical experts, consumer representatives and academics reviewed findings from the Cost-of-Service Study (CoSS), which provides evidence to guide tariff decisions. The workshop allowed these groups to weigh the recommendations and discuss how transparent, inclusive reform could strengthen the electricity sector's finances and respond to consumer concerns.

Why Electricity Revenue Is Falling Short

The study estimates that existing tariffs will recover about M74, approximately US$4.48, for every M100, approximately US$6.06, needed to supply electricity in the 2026/27 financial year. That leaves roughly a quarter of service costs uncovered by current tariffs, raising questions about how the sector can sustain reliable electricity services as demand grows. Closing the gap through an immediate adjustment would require an estimated average tariff increase of 35.6%, a substantial change for customers managing household expenses and business operating costs.

The recommendations propose a more gradual path, with an annual average increase of 12.8% over three years to reduce the immediate impact on consumers. These figures describe a proposed approach rather than an approved tariff decision, with continued consultation expected to inform the next regulatory steps. The financial challenge comes as the Lesotho Electricity Company's customer base is projected to grow from approximately 320,575 in 2025 to nearly 391,544 by 2030, adding about 71,000 customers, or nearly 22%.

What Could Change for Homes and Businesses

Businesses and industries could move towards time-of-use pricing, meaning the price of electricity would vary according to when it is consumed. The proposal would encourage more efficient energy use and help improve sector revenues, making the timing of consumption a more important consideration for commercial customers. For households, the study recommends a progressive tariff structure under which customers using more electricity would pay more, introducing a first step towards reforming the social tariff designed for low-consumption households.

Energy and Mining Minister Lejone Mpotjoane said sustainable electricity services require tariffs that reflect the cost of reliable supply and protect consumers. He welcomed the African Development Bank's support and the evidence generated by the studies, describing them as a basis for informed decisions that could improve the financial sustainability, efficiency and reliability of electricity services in Lesotho.

Consumer Protection Remains Central to the Debate

Participants stressed that further consultation must give consumer concerns and stakeholder perspectives a place in the decisions ahead. African Development Bank Chief Energy Regulatory Expert Rhoda Mshana said reform must balance the electricity sector's financial sustainability with consumer protection, reaffirming the Bank's commitment to helping Lesotho develop solutions that support more reliable and accessible electricity for people and businesses.

The work forms part of the African Development Bank's Africa Energy Sector Technical Assistance Program and contributes to Mission 300, the joint African Development Bank–World Bank initiative to connect 300 million more Africans to electricity by 2030. Lesotho's discussions link that wider access effort to a practical national challenge: developing a pricing system capable of supporting a growing electricity market and accounting for the needs of the people who depend on it.