Court bat­tle looms over LHWP

Lesotho Times - - Front Page - Her­bert Moyo

A SOUTH African non-gov­ern­men­tal or­gan­i­sa­tion has ac­cused Wa­ter and San­i­ta­tion Min­is­ter, Nomvula Mokonyane of mal­ad­min­is­tra­tion and de­lay­ing the im­ple­men­ta­tion of the sec­ond phase of the Le­sotho High­lands Wa­ter Project (LHWP Phase II).

The Or­gan­i­sa­tion Un­do­ing Tax Abuse (OUTA) says the de­lays in the im­ple­men­ta­tion of the LHWP Phase II have re­sulted in cost over­runs which could prej­u­dice South African tax­pay­ers to the tune of M7, 8 bil­lion.

OUTA de­scribes it­self as “a proudly South African non-profit civil action or­gan­i­sa­tion, com­pris­ing of and sup­ported by peo­ple who are pas­sion­ate about im­prov­ing the pros­per­ity of our na­tion”.

It gave the min­is­ter un­til to­day to re­spond their con­cerns or face le­gal action.

Ms Mokonyane has since is­sued a pre­lim­i­nary re­sponse to OUTA’S al­le­ga­tions by de­scrib­ing them as “a re­hash of old al­le­ga­tions for which no ev­i­dence or proof have been ad­vanced to sub­stan­ti­ate them”.

“The Min­is­ter at once re­jects with con­tempt the al­le­ga­tion that she has de­lib­er­ately de­layed the im­ple­men­ta­tion of the LHWP Phase II and more-so that this was done in or­der to ad­van­tage cer­tain pre­ferred ser­vice providers.

“Phase 2 of the LHWP is tar­geted for com­ple­tion in early 2025 with stor­age of wa­ter in the new

“Poli­hali Dam com­menc­ing in 2024. Ef­forts are be­ing made to mit­i­gate de­lays ne­ces­si­tated by the amend­ments to the pro­cure­ment poli­cies and the sev­eral changes in gov­ern­ment in Le­sotho over the last 5 years,” reads part the Ms Mokonyane’s re­cent re­sponse.

The LHWP is a multi-phased project to pro­vide wa­ter to the Gaut­eng re­gion of South Africa and to gen­er­ate hy­dro-elec­tric­ity for Le­sotho. It was es­tab­lished by the 1986 Treaty signed by the gov­ern­ments of Le­sotho and South Africa.

The project en­tails har­ness­ing the wa­ters of the Senqu/or­ange River in the Le­sotho high­lands through the con­struc­tion of a se­ries of dams for the mu­tual ben­e­fit of the two coun­tries.

Phase I of the LHWP, con­sist­ing of the Katse and Mo­hale dams, the ‘Muela hy­dropower sta­tion and as­so­ci­ated tun­nels was com­pleted in 2003 and in­au­gu­rated in 2004. Phase II of the LHWP is cur­rently in progress. It con­sists of two separate but re­lated com­po­nents: wa­ter trans­fer and hy­dropower gen­er­a­tion.

The bi­lat­eral project which is es­ti­mated to cost at least M23 bil­lion, is ex­pected to pro­vide about 3 000 jobs at the peak of its op­er­a­tions.

The wa­ter trans­fer com­po­nent of Phase II com­prises an ap­prox­i­mately 165m high con­crete faced rock fill Dam at Poli­hali down­stream of the con­flu­ence of the Khubelu and Senqu (Or­ange) Rivers and an ap­prox­i­mately 38km long con­crete-lined grav­ity tun­nel con­nect­ing the Poli­hali reser­voir to the Katse reser­voir. Other Phase II ac­tiv­i­ties in­clude ad­vance in­fras­truc­ture (roads, ac­com­mo­da­tion, power lines and telecom­mu­ni­ca­tion) and the im­ple­men­ta­tion of en­vi­ron­men­tal and so­cial mit­i­gat­ing mea­sures.

The hy­dropower com­po­nent of Phase II, which is cur­rently un­der fur­ther fea­si­bil­ity stud­ies, may in­clude a pumped stor­age scheme, con­ven­tional hy­dropower such as the ex­pan­sion of the ‘Muela in­fras­truc­ture or new green­field sites.

Its ex­act form will be de­ter­mined on com­ple­tion of the fur­ther fea­si­bil­ity stud­ies. Phase II is ex­pected to be sub­stan­tially com­plete by the end of 2024.

OUTA wrote to the min­is­ter on 19 July, 2017 de­mand­ing re­ports on the “progress of the LHWP II, fi­nan­cial records of the pay­ments made to Le­sotho in the form of roy­al­ties, a copy of the LHDA anti-cor­rup­tion pol­icy and the names of the per­sons and/or busi­nesses found guilty of cor­rup­tion in the im­ple­men­ta­tion of Phase I”.

The also com­piled a damn­ing re­port on the LHWP II ti­tled The Sta­tus Quo of the Le­sotho High­lands Wa­ter Project Phase II.

The re­port was writ­ten and com­piled by Hel­gard Muller, an in­de­pen­dent Spe­cial­ist Con­sul­tant in Wa­ter Pol­icy, Reg­u­la­tions and In­sti­tu­tions and Julius Kleyn­hans, the Port­fo­lio Direc­tor of Wa­ter and En­vi­ron­ment at OUTA.

The re­port quoted for­mer Depart­ment of Wa­ter Af­fairs Direc­tor-gen­eral, Pro­fes­sor Mike Muller say­ing, “That project is al­ready seven years late and we need the min­is­ter to ex­plain why her depart­ment is re­duc­ing Gaut­eng province’s wa­ter se­cu­rity and what she is go­ing to do about it.”

Pro­fes­sor Muller ex­on­er­ated Le­sotho of any cul­pa­bil­ity for the de­lays in im­ple­ment­ing the project, say­ing although South Africa’s cab­i­net had au­tho­rised the pro­cure­ment of con­sul­tants months ago, ten­ders had still not been is­sued.

“While Le­sotho was ready to pro­ceed, South Africa was hold­ing up the process. What is the prob­lem? Is some­body try­ing to do a deal with this vi­tal project? We can­not af­ford to put the se­cu­rity of Gaut­eng’s econ­omy at risk like this,” Mr Muller said in the re­port.

Sec­tion 3.9 of the OUTA re­port tiled, Im­pli­ca­tions of the de­lays on LHWP II, states that “the ac­tual en­gi­neer­ing de­sign work on the Poli­hali Dam and Tun­nel will only start in the sec­ond half of 2017 then re­al­is­ti­cally as­sume an­other 12 months be­fore de­signs are at such a stage that work can be put out to ten­der”.

“The pro­gramme al­lows for an­other 15 to 18 months of ten­der de­sign and the ten­der pe­riod be­fore a con­trac­tor can be on site. Add all this up and it is clear that the ac­tual con­struc­tion may not start un­til the mid­dle of 2019.

“Based on the cur­rent progress in the award­ing of ten­ders and ap­ply­ing re­al­is­tic time­lines for such a com­plex project it is not fore­seen that the first wa­ter could be de­liv­ered be­fore the third quar­ter of 2025. This will be seven years later than planned.”

OUTA con­cludes that the de­lays will have se­ri­ous im­pli­ca­tions for the province of Gaut­eng which in­cludes the com­mer­cial hub of Jo­han­nes­burg.

Some of the im­pli­ca­tions in­clude the risk of wa­ter short­ages, cost over­runs, eco­nomic re­straint on de­vel­op­ment as well as the pay­ment of far more roy­al­ties to Le­sotho than ini­tially an­tic­i­pated.

“In the fea­si­bil­ity re­ports the cost of the project was es­ti­mated as M 17,372 bil­lion (on De­cem­ber 2011).

“At the an­nual tar­iff con­sul­ta­tion done in Au­gust 2016, the TCTA used an es­ti­mated cap­i­tal cost of R 25,1 bil­lion for LHWPII but clearly stated that the ac­tual costs will only be known once the con­struc­tion ten­ders had been awarded,” OUTA states in the re­port.

This would mean the de­lay has re­sulted in a cost es­ca­la­tion of M7, 8 bil­lion.

“Im­ple­men­ta­tion de­lays will make the project even more ex­pen­sive- and even­tu­ally cost wa­ter users and tax­pay­ers much more.

“Cost over­runs can be­come a heavy bur­den on con­sumers in Gaut­eng and make the wa­ter from LHWP 2 un­af­ford­able.

“The lack of an in­de­pen­dent wa­ter and eco­nomic reg­u­la­tor for wa­ter pric­ing in South Africa means that un­like elec­tric­ity where NERSA is do­ing its best to con­tain elec­tric­ity prices it re­mains un­clear how the LHWP II tar­iffs will be con­trolled and reg­u­lated,” OUTA con­cludes.

In her pre­lim­i­nary re­sponse Ms Mokonyane said the “LHWP Phase II is but one of the sev­eral in­ter­ven­tions aimed at se­cur­ing the wa­ter fu­ture of Gaut­eng”.

She said there were other in­ter­ven­tions to en­sure ad­e­quate wa­ter sup­plies for Gaut­eng in­cluded a pro­gramme to treat acid mine wa­ter which would yield re­sults in 2019/20.

She has un­til to­day to give a full sat­is­fac­tory re­sponse to OUTA or face le­gal action.

SOUTH African Wa­ter and San­i­ta­tion Min­is­ter Nomvula Mokonyane.

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