Local firms lag behind in LHWP II jobs


Bereng Mpaki

LOCAL companies still lag behind in the comparative ratio of jobs against South African companies in the implementation of the second phase of the Lesotho Highlands Water Project (LHWP II).

This came out at a recent workshop organised by the Lesotho Highlands Water Development Authority (LHDA) to conscientise local construction companies about compliance with tender requirements in Maseru recently.

The workshops are being held throughout this August and September in different districts.

The LHDA said they the workshops will help them increase the chances of local companies participating in the multi-billion maloti project.

Principal Secretary in the ministry of Water Affairs, Emmanuel Lesoma, said local contractors still lag behind.

He said they want to ensure that local and South African companies share the monetary benefit on a 50/50 ratio of infrastructure works.

According to Mr Lesoma, local companies have accounted for about 45 percent of the monetary value of the jobs done so far which are consultancy services in implementation of LHWP II, while South African companies have commanded 55 percent.

Mr Lesoma said the project was now at a point where development of advance infrastructure towards construction of the Polihali dam is about to begin.

“In the development of infrastructure, local businesses must have an equal share with South African companies,” Mr Lesoma said.

“However, on the funds that have been used at this point, South African contractors and consultants have benefited about 55 percent, while Lesotho businesses have got about 45 percent.”

Some of the advance infrastructure projects local companies can compete for in LHWP II include construction of access roads, bridges, powerlines and telecommunications installation, ancillary public service facilities such as clinics, Mokhotlong prison and school among others.

“Now the authorities of the project are working hard to ensure parity between the monetary benefits for Lesotho and South African companies.

“That is why the LHDA is facilitating the process of improving the participation of local contractors (through the workshops) in the project so that they may derive the same monetary benefit as their South African counterparts,” Mr Lesoma.

For her part, LHDA’s chief executive, Refiloe Tlali, said by organising these series of workshops, the LHDA is responding to local contractor’s interest in LHWP II of the project.

“In clarifying the procurement framework and sharing lessons learnt from our many years of procurement experience, we are enabling fellow countrymen to position themselves better to take advantage of the opportunities that Phase II has to offer,” Ms Tlali said.

Ms Tlali further indicated that implementation of the first phase of the project taught them crucial lessons about local contractors.

“The lessons include lack of understanding on the tender requirements as enshrined in the procurement policy. This in most cases lead to local contractors failing to make it into the list of recognized contractors capable of being allocated contracts.”

However, the Consortium of Lesotho Contractors (CLC) has called for the abandoning of the current LHDA approach saying it will benefit South Africa companies more than locals.

Previously, the local companies were not required to tender and their stake was guaranteed.

However, in LHWP II local firms will have no such privileges and will be expected to tender like everyone else.

CLC secretary Retšelisitsoe Motlojoa who attended the workshop said the tendering model would increase disparities between companies from the two countries as local firms still lack capacity to meet the tendering procedures.

CLC is made up of 32 local companies with expertise in different fields. Inspired by the decision to implement Phase II of LHWP, the consortium was established and incorporated in 2010.

It was formed to undertake mega projects that exceed the capacity of individual member companies or projects, which CLC members would decide to undertake collectively to capacitate other members or to generate income for CLC.

Mr Motlojoa indicated that in the implementation of LHWP I, LHDA took the initiative to empower Basotho by consolidating their capacity which ensured they got notable participation.

“Local firms did not have to tender to partake in LHWP I, having noted that Basotho’s capacity was low, LHDA ensured they were included as part of the project this way,” Mr Motlojoa said.

He said the LHDA asked Basotho companies to form construction and consultancy consortiums upon which the Allied Basotho Consultants (ABC) was birthed.

Mr Motlojoa, who is also a former employee of the LHDA, further argued that basing the sharing of benefits on monetary basis as opposed to work would negatively affect local firms since only local employees would be hired instead of the firms.

Article 10 of the phase II agreement stipulates that local and South African firms shall share value of all work equally on monetary basis, considering shareholding and operational experience among others.

The article however, goes on to indicate that procurement is done based on competitiveness, transparency, cost effectiveness and quality, with preference order starting with Lesotho firms followed by RSA, then region and then other places.

“That is killing our firms if you are going to hire their employees and leaving the firms as shells without skilled members.”

He further said the new approach would allow only a few powerful local firms to stand any chance of getting tenders, while the rest will not qualify.

“You could say these roadshows are increasing the firms’ hopes only for them not to be realised. It is giving them a false hope because very few of them are likely to participate given the strict terms of procurement.”

Instead, he urged the LHDA to unpack each project and identify clear portions that Basotho have clear capacity to carry out such as supplying transportation and plant services among others.

Mr Motlojoa further said products that originate in Lesotho such as crush stone, sand and quarry should be supplied by Basotho. He said these supplies would cover 30 percent of the overall 50 percent works earmarked for local firms.

He said goods originating in South Africa but supplied by Basotho, they should be factored into the financial benefits accruing to South Africans.

LHWP is multi-billion maloti project between the governments of Lesotho and South Africa and comprises water transfer and hydropower generation components and ancillary developments.

The water transfer component entails the construction of dams and tunnels in Lesotho, enhancing the use of the Senqu (Orange) River and its tributaries by storing, regulating, diverting and controlling the flow to effect the delivery of specified quantities of water to South Africa, and utilising the delivery system to generate hydro-electric power in Lesotho.

The major works of Phase I included the construction of the Katse Dam, the water transfer and delivery tunnels, ‘Muela Dam and ‘Muela Hydropower Plant and the Mohale Dam. The Phase II water transfer component comprises a dam at Polihali and a gravity tunnel that will connect the reservoir at Polihali with the Katse Reservoir.

The structure of the envisaged hydropower component is subject to the outcome of the further feasibility study which is now nearing completion.

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