- delays to cost M8 billion
A SOUTH African non-governmental organisation has released a damning report on the Lesotho Highlands Water Project (LHWP Phase II) saying the eight year delay in implementing the project would prejudice South Africa.
The delays would force South Africa to fork out millions of maloti to Lesotho in royalties for water which can only be delivered in 2027, the organization claimed.
The Organisation Undoing Tax Abuse (OUTA) also condemned plans for Lesotho to supply water to Botswana, saying Lesotho should rather prioritise supplying South Africa only. This because SA already lacks sufficient water due to population growth, urbanisation, economic demands and pressure to ensure food security.
The OUTA concerns are expressed in its latest report titled ‘Public Narrative Report on the status of the Lesotho Highlands Water Project Phase II’. The report was written and compiled by Helgard Muller, a specialist consultant on water policies, regulation and institutions. It was reviewed by Julius Kleynhans, OUTA’s operations executive.
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 M24 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.
Professor Muller exonerated Lesotho of any culpability for the delays in implementing the project. He instead accused the South Africa government of delaying the awarding of major tenders for the project.
“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 his report.
OUTA says delays in implementing the project had resulted in a cost escalation of M7, 8 billion from the initial projected cost of M 17,372 billion as per the feasibility studies conducted in 2011.
“The agreement on the LHWP II was signed on 11 August 2011 between the governments of Lesotho and South Africa,” the OUTA report states.
“At the signing of the agreement the original intention was that water delivery from LHWP II will commence in 2019. Now in 2019, eight years after the signing of the agreement on LHWP II, the LHDA’s latest master programme indicates that the Polihali Dam will only be completed in August 2025 and the Polihali-to-Katse transfer tunnel in February 2026. This on condition that the two main construction contracts (for Polihali Dam and the Polihali-to-Katse transfer tunnel) will be awarded on time, that there is no further political interference from either Lesotho or South Africa and that construction proceeds as planned.
“Based on the current progress in the awarding of tenders and applying realistic timelines for such a complex project the delivery date of early 2026 may still be optimistic. The first water will not be delivered before late 2026 or early 2027. This will be eight years later than planned.”
OUTA states that this expected eight year delay in the completion of the LHWP II will hit South Africa hard as it will not only result in water shortages but also force it to pay royalties for water long before it is actually delivered by Lesotho.
“The delays will have serious implications for Gauteng including risk of water shortages, cost overruns, economic restraint on development and royalties paid to Lesotho will far outweigh the benefit to South Africa.
“It is clear that the minimum royalty payments (to Lesotho) will start to increase from 2019…Even though the LHWP will be unable to deliver more water to South Africa (at least until the completion of the LHWP II possibly in 2026), the Lesotho government can claim higher royalty payments (from 2019 onwards). South Africa may therefore be forced by the agreement of 2011 to pay higher royalty payments for six to seven years without enjoying the benefit of such additional costs.”
OUTA also condemned plans for Lesotho to supply water to Botswana, saying Lesotho should only prioritise supplying South Africa as it already lacks sufficient water supplies with the increased demands in population growth, urbanisation, economic demands and food security.
“It is alarming to note that the feasibility studies for the Lesotho-Botswana Water Transfer Project (LBWT Project) to supply Lesotho water to Botswana are running ahead.
“To date there has been no public participation for this scheme or a formal international agreement for the LBWT Project that involves a 720-kilometre pipeline across South Africa and will negatively affect existing users in South Africa,” OUTA states in its report.