Project title
Lesotho Highlands Phase II (Project RG‐2)
Project sponsors
The project proponents are the Lesotho Highlands Development Authority (LHDA) and
the Lesotho Highlands Water Commission (LHWC)
Participating countries
Lesotho and South Africa
Objectives
To construct the Polihali Multi‐purpose Dam to transfer water to the Katse Dam and
then through the existing infrastructure and the Muela Hydropower Complex to
augment water supply to the Gauteng and the Vaal River water supply system. The
project will also provide advanced infrastructure, environmental and social
development programmes in Lesotho.
Project description
The total project was originally conceived to transfer 70 m3/s from the upper portions
of the Lesotho Highlands into the Vaal River Basin. The aim of Phase II is to deliver
more water by gravity to the Vaal River system in South Africa. Phase II is expected to
increase surface water storage in Lesotho by 2.2 x 106 m3 and the existing hydropower
generation capacity in Lesotho by 1 200 MW, to the benefit of both local and regional
power consumption.
From the social and environmental perspective, it is estimated that about 17 000
people from 72 villages will be affected and compensated accordingly, and will further
benefit from improved water supply and sanitation services.
Expected results
Increased surface water storage in Lesotho by 2.2 x 106 m3, generate an additional
1 200 MW and provide adequate safe drinking water and sanitation services to the
17 000 people displaced by the project.
Ongoing related activities in the The DBSA has provided about R1 billion to the earlier aspects of the project since it
region
started in the late 1980s.
Description of national plan to the The LHWP project has been implemented in a number of phases and Phase 1A and 1B,
project
which included building the Katse and Mohale dams and their tunnel systems, have
been completed. The agreement to proceed with implementation of Phase 2 was
announced by Lesotho and South Africa in December 2008, and finally signed in
August 2011.
Status
The project can be considered to be in Phase 3 of the ICA Project Development
Phases.
Next steps
Pre‐feasibility studies were concluded in 2011, financed by the DBSA. The next project
development stage is feasibility studies to be conducted in 2012, followed by final
designs in 2013 and tendering for construction in 2014. Construction of the project is
expected to start in 2015 and will be completed in 2020.
Business model
Investment project, financed as a BOT or from loans.
Main parties in place
LHDA, LHWC
Main parties to be procured
Possible project financiers are the AfDB and DBSA.
Project challenges
The major project challenges include:
The resettlement and timely compensation of the 3 300 families from the 72
villages;
Conclusion of the royalties and water purchase agreements between
Lesotho and South Africa; and
The timely sourcing of project finances.
Project documentation available
1. Water project to create jobs for construction workers. Lesotho Times. 2010.
http://www.lestimes.com/?p=4314. Accessed 18 August 2011.
2. International Water Power And Dam Construction, An African Success Story. June
2010.
http://www.waterpowermagazine.com/story.asp?storyCode=2056820.
Accessed 18 Aug 2011
Intervention requiring financing
Project to be presented for financing during the planned 1st SADC Infrastructure
Investment Summit and Conference to be held in the last quarter of 2012.
Revenues for financing repayment This is an infrastructure investment project, which will raise sufficient revenue to
repay any loans procured for implementing the project
Estimated total cost
The estimated total project costs are US$1.001 billion.
Execution period
After project funding is secured in 2012 and the final designs and tendering process is
completed in 2014, construction will commence in 2015 and be completed by 2020.
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