2005 - 2006 - Pinsent Masons Water Yearbook 2012

LESOTHO PART 2: COUNTRY ANALYSIS
water was being delivered to South Africa from the Katse Dam. By 2020, four further dams will be
linked to the scheme, delivering a total of 82m 3 per second.
Some problems
There are a number of costs associated with the project. Total environmental, compensation and
rural development costs were estimated in 1989 by the authorities linked with the project at US$39
million, or 4% of the total project’s cost. Sources external to the project have pointed out that the
project involves the loss of 11,000 hectares of grazing or arable land, affecting 20,000 Basotho
people, who are mostly subsistence farmers. This in turn will exacerbate the country’s dependence
on food imports.
In May 2002, Masupha Sole, the former Chief Executive of the Lesotho Highlands Development
Authority was sentenced to a total of 18 years in prison. He had been convicted on 13 counts of
bribery and fraud for taking bribes of about US$2 million over a period of nine years from international
consultants and contractors. In September 2002, the Lesotho High Court found Canadian
engineering firm Acres International (Acres) guilty of paying bribes for contracts on the project. The
company had paid US$278,000 to Masupha Sole, through its local agent. Acres maintains that it was
unaware that some of its money that was being used on the project was being secretly paid to Sole's
Swiss bank accounts. Acres was fined €22.8 million in 2003. If the judgment is upheld, the firm faces
being disbarred by the World Bank, which is financing the project. This will also affect Acres
involvement with the Bujugali Dam in Uganda and the Nam Theun 2 dam in Laos. An internal
investigation by the World Bank in 2003 found that there was insufficient evidence to punish Acres.
Other companies involved in the project yet to be tried include Spie Batignolles of France and the
UK’s Sir Alexander Gibb, now part of the US group Jacobs.
Longer term considerations
Some authorities on water conservation now believe that South Africa ought to concentrate on
conservation as a means of postponing the further development of the project. For example,
projections by Rand Water indicate that the second phase (the Mohale Dam) could be delayed by
some years with a 10% decrease in water consumption, or up to 17 years with a 40% decrease in
water consumption. It is unclear if the aspirations of people living in these townships have been fully
factored in for those assumptions.
Utility privatisation is under consideration
The UK’s Adam Smith Institute has been working for the Lesotho Government since 1997, with the
aim of developing an effective legislative and regulatory framework for the water sector, and devising
and implementing a programme for private sector participation in the delivery of water and sewerage
services. The latter involves specifying the best form of management contract, developing the
acceptance criteria, initiating the bidding process and assisting the Government in awarding the short
term management.
136 Pinsent Masons Water Yearbook 2005 – 2006