‘M8.5 billion earned from water royalties’

‘M8.5 billion earned from water royalties’

WORK on Phase Two of the multi-million maloti Lesotho Highlands Water Project (LHWP) is set to roar into life after a joint venture involving Lesotho and South African companies were awarded the contract.  The Lesotho Highlands Development Authority (LHDA) has appointed Aurecon Lesotho (Pty) Ltd to design and supervise the construction of the major bridges to be built under Phase II of the Lesotho Highlands Water Project (LHWP).

The major bridges project also includes the realignment of the A1 national road in the vicinity of the bridges.
Lesotho-based White Life Consultants (Pty) Ltd and Leporogo Specialist Engineers CC of South Africa are sub-consultants.
Valued at approximately M123 million, the contract commenced on November 5.
Construction of the bridges is expected to be completed in early 2024.

In October Nthane Brothers and Sinohydro SA JV were awarded the M235 million Phase 2 of the contract for the Polihali north-east access road.
The second phase of the LHWP comprises the construction of the Polihali Dam and water transfer tunnel, hydropower generation, social and environmental programmes.
Our reporter, Refiloe Mpobole, talked to the LHDA spokesman Masilo Phakoe about how Basotho will benefit from the project. Below are excerpts from the interview.

How much have you invested in that project?

The Lesotho Highlands Development Authority is the implementing authority mandated to implement, monitor and maintain the Lesotho Highlands Water Project on behalf of the governments of Lesotho and South Africa.
Phase I was completed in 2003 and the implementation of Phase II started in 2013. One hundred percent of the LHDA’s time is invested in the monitoring, maintenance and implementation of the project.

Contract 4018A is one of the first two construction contracts to be awarded on the advance infrastructure on Phase II.
The other was the contract awarded for the construction of the Polihali north-east access road, also part of the Phase II advance infrastructure most of which will be completed before the construction of the Polihali Dam and the Polihali Transfer Tunnel.

How is the government going to benefit?

Lesotho is benefitting directly through royalties from water transfer and generation of electricity for domestic consumption. Lesotho also benefits from the infrastructure built under the project.
This includes roads, power lines and telecommunications networks and tourism facilities.
There was significant employment of Basotho workers on Phase I of the project, especially during the construction phase.
Other benefits include business opportunities for local consultants and contractors and training and skills development of Basotho. Similar benefits are expected during Phase II.

How is it going to contribute to the economy of Lesotho?

Lesotho will benefit in a number of ways: from the infrastructure built in Lesotho, including roads, power lines, telecommunications, buildings and tourist facilities.
The employment of a significant proportion of all people working on the project during and after construction, business opportunities during and after construction in terms of supplying materials and services for consultants and contractors, training and skills development of Basotho, the development of Basotho professional firms e.g. engineers, environmental and social consultants, tourism development, tax revenues and the royalties earned on all water delivered to South Africa.
The current annual royalty revenue will increase when Polihali is commissioned as the volume of water transferred to South Africa will increase incrementally from the current supply rate of 780 million cubic metres per annum to more than 1 270 million cubic metres per annum.

The water conveyance system also generates electricity for Lesotho which has reduced the country’s dependence on imported electricity, saving on import costs and contributing to the country’s GDP by stimulating local industry and economic growth. Phase II will increase the quantity of electricity generated in Lesotho and is a further step in the process of securing an independent electricity source to meet Lesotho’s domestic requirements.

Phase I contributed positively to the economy of Lesotho in terms of employment and skills development. During the construction of Phase I more than 16 000 jobs were created while Basotho contractors and consultants were contracted or subcontracted on the implementation of a number of the project elements.
Since the start of water delivery to South Africa in 1998, Lesotho has earned millions of maloti in royalties, which is one of the major sources of revenue for the government of Lesotho. At the end of January 2018, M8.5 billion had been earned in royalties.

The water conveyance system generates electricity for Lesotho which has reduced the country’s dependence on imported electricity, saving on import costs and contributing to the country’s GDP by stimulating local industry and economic growth.

At the end of December 2017, the cumulative electricity sales revenue from the time the ’Muela hydropower plant was commissioned in 1998 amounted to approximately M1.1 billion.
Lesotho’s tourism industry has grown since the implementation of Phase I.
Local and international tourists have visited the sites, the improved road and telecommunications infrastructure has improved access and a hospitality support industry has developed.

How are Basotho going to benefit from the project?
Phase II of the Project will effectively open up the mountain areas through the development of new roads of high quality to provide improved access to basic services and facilities and for ease of travel between the lowlands and the highlands.

The communities are going to benefit through the LHDA’s water and sanitation programmes which will provide access to potable water, sanitation facilities and liquid waste disposal facilities.
This should improve the primary health and hygiene of the communities living in this area by reducing the spread of water borne diseases.
The LHDA has also initiated a rural electrification initiative in the Polihali area working with local women.

Tourism will increase and will bring opportunities that include among others, new hospitality related services and products, employment in hospitality establishments, accommodation services, tour guide services, food production, transportation services and provision of other basic human requirements that tourists purchase along with souvenirs.
These boost local spending and have a trickle-down effect on the economy.

In addition, the LHDA will implement sustainable livelihood restoration support projects for the benefit of households affected by Phase II.
The intention is to offer support to affected households through projects of their choice with advice from LHDA and experts in livelihood restoration.
These projects will look at land-based, wage-based and enterprise-based options.

The Phase II community development initiatives will be planned and implemented in all communities in the project areas.
Consultations with affected communities have been core in the identification of appropriate projects to ensure that the projects address the needs of the people concerned.
Pilot projects are to commence in the areas affected by Phase II in early 2018.

Short term benefits include the job opportunities that the implementation of Phase II will bring. The LHDA has developed Labour Recruitment Guidelines that will ensure Basotho gain access to jobs during the construction phase in particular.  At the same time, local businesses will benefit from the increased market size that the influx of people into the area will bring.

In the case of employment, please give the estimated number of jobs and tenders which the project is going to generate.

It is expected that Phase II will generate approximately 3 000 jobs, most of them during the project’s construction phase.
Many contracts are going to be generated over the course of the project, generating many opportunities for local companies and many job opportunities.
It is not possible to predict an exact number at this point.

Staff reporter 

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