LHWP project in full flow
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.
LHDA CEO Refiloe Tlali.