…as High Court nullifies govt’s decision to fire Phaks JV from M170 million project
…putting in limbo decision to appoint new company to take over project
Mohloai Mpesi
THE government finds itself in a bind after the High Court nullified its decision to terminate a M170 million contract with Phaks Joint Venture (Phaks JV), the company initially contracted to construct the long delayed Ha Belo electricity substation.
The High Court decision is a big blow to Prime Minister Sam Matekane’s government as it comes after it had recently signed a fresh M50 million contract with another South African company to complete the project that Phaks JV had left unfinished amid escalating completion costs.
The Ministry of Energy last month terminated Phaks JV’s contract, accusing the company of failing to complete the M86.6 million project, which has since ballooned to M170 million — allegedly due to the contractor’s incompetence.
Following the termination, the ministry engaged South African electrical engineering firm, Actom (Pty) Ltd, at a cost of M49,720,215.42, to complete the works left unfinished by Phaks JV.
However, Phaks JV rejected its termination, arguing that it remained legally bound to continue the Ha Belo project.
Finding itself in a fix, bound by two contracts — one with Phaks JV and another with Actom — the government approached the High Court seeking to enforce its termination decision.
However, the Northern Division of the High Court (located in Leribe) declined jurisdiction, ruling that the Ministry of Energy should have pursued arbitration first before approaching the court.
“…The original contract is still binding on the parties. This, therefore, means that the Arbitration Clause remains binding.
“In terms of the Arbitration Act No. 12 of 1980, the Court (referred to) is the High Court, and in terms of Section 22 of the Act, the Court has general powers and jurisdiction to deal, among others, with eviction and interdict.
“In terms of Section 4 of the Act, however, this Court’s jurisdiction is delayed, unless the Applicant (Energy ministry) had proceeded in terms of Section 4(2). The Applicants should have initiated the arbitration process when it became clear that there was a dispute following the termination of the contract under Clause 42.1.
“In the result, the Court declines jurisdiction. The (Energy ministry) application is dismissed with costs,” Justice Makampong Mokhoro ruled this week, adding that full reasons would follow later.
Background
The Ministry of Energy awarded Phaks JV the contract on 18 August 2021 for the construction of the Ha Belo 33/11kV substation and 33kV line (Project LS-LEC-190007-CW), with an 18-month completion timeframe.
Allegations of massive corruption have dogged the project, with millions of maloti allegedly having been paid to the contractor despite only delivering minimal work.
Work began in November 2021 and was scheduled for completion by April 2023, within an initial budget of M86.6 million but the costs later escalated to M121,577,004.21, yet the project remained incomplete, forcing the government to cough out another M50 million.
The project was divided into three key components; installation of a transmission line from Ha Mopeli to Ha Belo, installation of a transmission line from Hlotse to Ha Belo, and construction of a power substation at the Ha Belo industrial site.
The Ha Belo electrification project forms part of the World Bank-funded Lesotho Renewable Energy and Energy Access Project (LREEAP), aimed at expanding electricity access in peri-urban and rural areas to drive economic growth. LREEAP also seeks to establish a sustainable framework for rural electrification through mini-grids in remote areas.
In June 2025, the government refunded M22 million to the World Bank after failing to account for funds meant for the Ha Belo substation.
The entire project has been mired in corruption allegations, with funds reportedly siphoned off while little actual work was not completed.
The Ministry of Energy’s Principal Secretary, Tankiso Phapano, has since distanced himself from the scandal.
In March this year, Mr Phapano explained that the contract was signed in August 2021, and work began the same month. He only assumed office as PS in January 2024, long after the deal was signed and funds managed. He said he was briefed about the situation during his first week in office.
His predecessor, Themba Sopeng, was in January 2025 charged with corruption, embezzlement, and money laundering in connection with the project.
The Directorate on Corruption and Economic Offences (DCEO) accused Mr Sopeng of unlawfully and intentionally engaging in corrupt practices in June 2021 by abusing his role as chief accounting officer in facilitating the award of the tender to Phaks JV without adhering to proper procurement procedures.
Mr Sopeng was charged alongside Binare Ramochele, Mookho Pule, ‘Mathapelo Silase, Neo Lekhotla, Motsekuoa Phalole, Teboho Mokhethi, Makhabane Leluma, Mojaki Lesenyeho, and other representatives of Phaks JV who allegedly played various criminal roles in the project.
In June this year, Prime Minister Sam Matekane announced that an additional M50 million would be required to complete the project.
The government subsequently contracted Actom (Pty) Ltd — which had initially been subcontracted by Phaks JV as the project’s equipment manufacturer — to take over the work.
According to a copy of Actom’s contract seen by Lesotho Times, the Ministry of Energy entered into a M49,720,215.42 agreement with Actom on 20 September 2025, signed by PS Phapano.
In a statement released on 8 October 2025, the ministry blamed the project’s cost overruns on mismanagement and poor administration.
“The project ended up surpassing the agreed budget because of bad administration. It was discovered that the contractor was paid money he did not deserve,” the statement read.
“The contractor was paid to procure all project equipment, but only a small portion was delivered and installed. Only limited transmission line works were completed between Ha Mopeli and Ha Belo, and between Hlotse and Ha Belo. Because of this, the project stalled in 2023 after funds were depleted.”
The ministry further noted that attempts to renegotiate with Phaks JV from early 2024 failed to yield progress.
“The ministry decided to pay for the equipment that the contractor had failed to procure from the manufacturer, as it was about to be auctioned. It was agreed that the equipment would become ministry property, and the manufacturer would take over completion of the works left undone by Phaks JV. Based on this agreement and contract provisions, the ministry terminated the initial contract and allowed the manufacturer to complete the project,” the statement added.
It remains to be seen whether the government will appeal Justice Mokhoro’s ruling or just opt for the arbitration route.
Whatever the case, if Justice Mokhoro’s judgement prevails, it will be yet another example of incompetence by the government in comprehending intricate legal issues. Either the government is getting bad legal advice or is loath to following proper legal processes.
Just last week, it dissolved the Government Asset Search and Recovery Task Team (GASRTT) on the grounds there was no legal instrument to back its existence. This despite the GASRTT being operational for almost three years.
