In a mutually beneficial agreement, the South African government has agreed to fund the next phase in the Lesotho Highlands Water project , which will provide hydroelectric power generation capacity for Lesotho and secure water supplies for South Africa. The SAR12bn (US$1.3bn) project will be funded by South Africa who will seek the majority of the capital from institutional lenders. It is due to be completed by 2020.
Between 1000MW and 1200MW is expected to be produced by the scheme, which will aid Lesotho's economy which is heavily dependent on the mining industry. South's Africa's economy will also gain a boost from the development, as the additional water supply from Lesotho has been earmarked for two major developments planned for Lephalale near Vryburg, where new mines are being established, and for strategic infrastructure projects planned for Steelpoort.
|Lesotho's Economy To Get Hydro Boost|
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This is part of the Highlands Water Project that has been in existence since 1986 when the first phase was implemented. However, in 2011 the project was shelved in light of a hydro electric element being cancelled. The new project will see the construction by South Africa of the Polihali Dam and connecting tunnels, with Lesotho building another new dam near Polihali. Both dams will feed the existing Katse Dam providing water for South Africa. The hydropower will be generated for Lesotho from these three dams. The announcement that South Africa will fund the hydro power section of the project relieves fears that the second phase of the agreement would not include power generation capacity for Lesotho.
Thanks to Lesotho's geography it is the source of large water reserves. We have noted a number of water infrastructure projects over the last years which have also been funded by international sources. For example, The Abu Dhabi Fund for Development has awarded an AED77.13mn (US$21mn) grant to the Lesotho government to finance the construction of a new dam. The Metolong Dam, which is being built on the South Phutiatsama River, will provide 71,000 cubic metres of potable water on a daily basis to the capital city of Maseru and neighbouring towns. It will have an overall capacity of 53mn cubic metres and is expected to provide a clean water supply for the region until 2025. This is a trend we expect to continue, with reports that Lesotho plans to export water Botswana and Namimbia.
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