BARRING any unforeseen challenges, the construction of the multi-billion maloti second phase of the Lesotho Highlands Water Project (LHWP) is on course for completion by 2024 to augment water supplies into South Africa while boosting electricity generation for Lesotho.
The senior management of the Lesotho Highlands Development Authority (LHDA), the body responsible for implementing the LHWP, led by Chief Executive Refiloe Tlali, met with Lesotho’s senior media managers at the weekend for an update on the implementation of the massive project and to clarify various issues surrounding it.
Also present were Chief Operations Officer Doctor Lukhele, Divisional Manager (development and operations) Reentseng Molapo, Divisional Manager Phase 11 Tente Tente, Divisional Manager Social Development and Environment Mahase Thokoa and public relations manager Masilo Phakoe.
Ms Tlali and her team spoke comprehensively about the immense benefits of the project for Basotho during and after implementation. This after the media managers sought explanation on how the project would benefit Basotho throughout all its phases. Apart from the main infrastructure works, from which Basotho could compete for consultancy and construction contracts, there were many other ancillary projects that could benefit citizens like tourism, aquaculture, irrigation, portable water, among others.
To illustrate the benefits of the project, phase one of the LHWP was raking in an average of M50 million monthly from the 780 million cubic metres flowing into South Africa annually. The water volumes will increase to 1260 cubic metres annually upon completion of phase two.
These royalties have steadily increased from an average M5 million in early 1997 to their current levels of about M50 million monthly. So far, about M5,9 billion has been collected from the water royalties from the beginning of the project up to now, Mr Molapo explained.
The royalties are calculated on the basis of the total cost savings that South Africa has been able to accrue by locating the project to Lesotho. Initial feasibility studies done in the early 1980s proved that it was possible to locate the water project within South Africa itself by building the infrastructure to intercept water from Senqu River for on-warding pumping into the Vaal Dam, the main supplying channel for Gauteng Province. However this option would have been massively expensive for South Africa costing about M3,5 billion by 1983 prices. Locating the project in Lesotho would nonetheless have cost only M1,6 billion resulting in savings of about M1,8 billion at that time. Lesotho is thus paid fixed royalties on the basis of the actual cost savings (with escalations) obtained by South Africa by relocating the project into this Kingdom as well as on the basis of a variable component, consisting of the actual amount of water delivered into South Africa monthly. The fixed component of the royalties expires in 2044 while the variable component for the actual water delivered will continue indefinitely.
Locating the project into Lesotho enabled South Africa to achieve massive cost savings, especially on the electricity costs that would have been required to pump the water into the Vaal from where the dams would have been built in South Africa. In Lesotho, the water flows into South Africa by gravity through a complex tunnel system that has been hailed worldwide as an outstanding engineering achievement and has won the LHDA more than 20 international engineering awards.
The current fluctuations in the royalties are based on the variations of quantities of the water delivered to South Africa, Mr Molapo explained. In winter, more water is delivered into South Africa via the tunnels to enable more power generation capacity for Lesotho at Muela hydro power station because of the high demand of power in winter. The volumes of water delivered in summer reduces resulting in lesser royalties.
Construction of the water transfer component of phase two including the building of the Polihali Dam and the transfer tunnels to Katse Dam en route to South Africa is expected to cost M17 billion. Estimates for the construction of the hydropower component of the project to generate electricity for Lesotho will be established once ongoing studies around that component of the project are completed. But the hydro power component will also inevitably cost several billions, said Mr Phakoe.
Ms Tlali explained that South Africa was wholly financing the water transfer component of the project, comprising of the building of the Polihali Dam and the delivery tunnels, while Lesotho will wholly fund the hydro-power component.
Families affected by the construction of phase one of the project had been successfully relocated and compensated, said Mr Phakoe.
The relocation of the households for phase two had not started since its implementation has only started now. Baseline studies that will explain the existing conditions of the people and the environment in the area of implementation of phase two had nevertheless been completed.
“We are now commissioning studies that will produce an impact analysis of the project before considering relocations,” Mr Phakoe said.
Mr Ntente explained the procurement procedure under phase two and how Basotho could benefit. He said all the procurement guidelines were drawn from the LHWP treaty and the phase two agreement.
The four pillars of quality, cost effectiveness, competitiveness, transparency underpinned the procurement process. After these four are satisfied, the second principle on preference then kicks in, said Mr Ntente. This ensures that preference is given to consultants and contractors in Lesotho first. Where these cannot be found, they are then sourced from South Africa, then SADC community member states before international entities are considered for the procurement of all goods and services.
Consultants and contractors registered in Lesotho and in South Africa will nonetheless share the value of all infrastructure works on an equal monetary basis, taking into account, among other things, their shareholding and operational experience. The infrastructure work mainly relates to roads, camps, bridges, bulk power and telecommunications networks while the main works comprise the construction of the dam and the tunnels.
Mr Tukwa spoke about other ancillary benefits like aquaculture, tourism, portable water and others for economic and social development of Lesotho.
In tourism, for instance, Mr Tukwa said the LHDA has assisted in improving nature reserves within project geographical areas, building hiking trails while trout farming concessions had been issued for employment and revenue generation. As a result, Lesotho had carved a niche market for the export of trout to South Africa and Japan.
Mr Lukhele called upon any other stakeholders with ideas about how to extract more ancillary benefits around management of Lesotho’s abundant water resources to bring these up for discussion and consideration by the LHDA.