Natalie Nyathi
The Lesotho Highlands Water Project is a bi-national initiative between Lesotho and South Africa that aims to transfer water from the Lesotho highlands to South Africa’s Gauteng region and generate hydroelectricity for Lesotho. While the project promises significant benefits, Phase II has been plagued by escalating costs and delays, raising concerns about governance and financial management.
The LHWP is an ongoing project established by a treaty in 1986 between Lesotho and South Africa. It involves harnessing the waters of the Senqu/Orange River in Lesotho through a series of dams and tunnels. The project is implemented in phases, with Phase I completed in 2003. Phase II, currently underway, includes the construction of the Polihali Dam and a transfer tunnel.
The primary objectives of the LHWP are to provide water to the Gauteng region of South Africa, generate hydroelectricity for Lesotho, and provide Lesotho with a source of revenue in exchange for the provision of water to South Africa.
The cost of Phase II has increased significantly from an initial estimate of R8 billion in 2008 to R53 billion. This substantial increase has raised concerns about governance, oversight, and accountability. The Democratic Alliance has called for an investigation into the financial mismanagement of the project, citing an R11 billion increase in just one year.
Several factors have contributed to the cost escalation. Delays due to years of administrative and procedural issues have pushed the completion date from 2019 to 2028 and now to October 2030. Treaty complications and negotiations with Lesotho have taken longer than expected, and market fluctuations have also affected costs. Additional social obligations requested by Lesotho have added to the financial burden, along with a boost to the contingency provision to align with international standards. Price escalations, design changes, and contractor claims linked to delays have further increased costs.
The cost increases and delays have raised several concerns. The financial burden on ratepayers is likely to grow, as bulk water boards will be charged more to extract water, increasing municipal costs and household water bills. Delays in the project could exacerbate water supply shortages in Gauteng, the Free State, and North West, affecting millions of residents. Weaknesses in governance and oversight have been identified as contributing factors to these issues, and South Africa is obliged to continue payments to Lesotho even when water deliveries are interrupted.
Despite the challenges, the LHWP offers several benefits. The project improves water security for South Africa, particularly in the Gauteng region, while providing Lesotho with income from the sale of water and electricity. It enables Lesotho to become self-sufficient in electricity production and has led to the development of roads and infrastructure in the country. Additionally, the project stimulates local industry and economic growth in Lesotho.
The Lesotho Highlands Development Authority has developed a plan to minimize further delays and cost overruns. The Lesotho Highlands Water Commission will appoint a multidisciplinary team of experts to conduct management audits of contracts, and a governance committee has been established to review progress monthly.
The Lesotho Highlands Water Project is a crucial initiative for both Lesotho and South Africa. However, the escalating costs and delays in Phase II raise serious concerns about financial management and governance. Addressing these challenges is essential to ensure the project’s successful completion and to realize its potential benefits for both nations.