Econet Telecom Lesotho owes government over M400 million in unpaid loans according to the Public Accounts Committee (PAC)
The figures were revealed in the ‘Report on the Consolidated Financial Statements of the Government of Lesotho for the Three Years 2013/14;2014/15 and 2015/16 And Other Incidental Findings’ that was presented in parliament by the PAC today.
“Econet telecom Lesotho is another company that the government of Lesotho borrowed money from the Development Partners on its behalf. The government of Lesotho signed a loan agreement with Exim Bank of China on May 9 2018, and December 14 2011 to finance Telecom National Network Phases I and II respectively to increase network coverage and improve services,” reads part of the report.
It adds that: “The principal loan disbursed to Econet for Phase I project was M221,194,835.10 and Econet has made a repayment of the principal loan to the tune of M14,373,161.67. The accumulated arrears amounted to M66,731,611.70 and the interest paid so far is M74,517,233.39. the outstanding balance stands at M202,474,194.15.”
It says government keeps paying this loan faithfully to the Exim Bank of China without any arrears although it still has an outstanding loan of M276,373,047.34.
Similarly, continues the report, for Phase II project, the principal loan given to Econet was M245,297,692.05 of which Econet paid only M22,570,853.05 to the government of Lesotho while the arrears stand at M34,933,333.32.
The outstanding loan is therefore M222,726,839.
PAC said it found “this scenario of events very disturbing because Econet is failing to pay the dividends and experienced sluggish repayment of the loans and the arrears”.
It said Econet claims that it is not making profits “but this is hard to believe as the committee suspects transfer pricing practices”.
“Again, the services have not improved as expected when the loan was secured for Econet. The committee was concerned that the government of Lesotho is shouldering the burden of paying loans on behalf of Econet while Econet is not remitting anything to the government.”
PAC therefore recommended that Econet must be up to date with repayments of the loan as per their loan agreement and pay their arrears within 12 months.
It also recommended that government as a shareholder should seriously consider review of stakeholders and management agreements within 90 days.