Africa-Press – Lesotho. Whichever way you look at it, Frazer Solar is the ultimate winner in this disaster over a botched contract. Because of the government’s bungling, the company is set to walk away with a staggering M855 million (€50 million).
This is the same profit the company would have received had the government implemented the solar project as per the September 2018 contract that has been a subject of court cases in South Africa, Mauritius, the United Kingdom and the United States.
Frazer Solar has now confiscated Lesotho’s assets that include water royalties, debts and shares. It is pursuing other assets across the world as it seeks to collect its dues.
The initial contract was worth M1.6 billion (€100 million) and was supposed to be financed through a loan to be paid over ten years. It included the supply and installation of between 34 000 and 40 000 solar water heaters.
Frazer Solar was to supply and install 1.5 million LED lights in government offices and houses of civil servants. This is in addition to the supply of 350 000 solar lantern lights to rural households.
It was a scrumptious deal for Frazer Solar which expected to make a M855 million (€50 million) profit. The brand and capacity of the solar water heaters are not specified in the court papers but Frazer Solar told the arbitrator that each was going to cost the government €2 500 (M40 000).
Including the freight, insurance, installation and ‘overhead per unit’, each heater cost the company €1 206 (M19 296). This means it was making a €1 294 (M20 704) profit on each water heater.
But the profit could have been more because there are mark-ups on the freight, insurance, installation and the so-called overhead per unit. The actual price of each heater was €811 (M12 976) before the additional charges.
Based on the 30 896 units it was supposed to supply in the initial phase of the contract, Frazer Solar was going to make M639 million (€39.98 million), a 51.8 percent profit margin.
That is the same profit margin the company was going to make on the 355 000 solar lanterns, 75 000 of which were said to be free. The unit price of each solar lantern was M832 (€52) giving the company M642 million (€40.18 million) in revenue.
From the LED lights Frazer Solar was going to make €500 000 or M8 million in profits. That brings the total profit to €51.6 million which is almost the same amount the arbitrator awarded. It is not clear if these are special LED lights or the ones sold over the counter and are already used in most government offices and houses.
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