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Lesotho Highlands Development Authority boss speaks on second phase of mega water project

by Sunday Express
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The second phase of the Lesotho Highlands Water Project (LHWP), which was launched in March 2014 at Tlokoeng in Mokhotlong by King Letsie III and President Jacob Zuma of South Africa, is yet another bilateral venture between the two neighbouring nations.

The project would, among others, see Polihali Dam being constructed at the confluence of Khubelu and Senqu rivers in Mokhotlong.

The LHWP is a multiphase initiative established by a 1986 treaty between Lesotho and South Africa and involves the construction of dams and tunnels in the two neighbouring countries, and generation of hydropower.

South Africa seeks to augment its water-supply through the project, while Lesotho expects to benefit from infrastructure such as roads, as well as royalties and electricity, from the initiative.

Phase One of the LHWP included the construction of Katse and Mohale dams, Muela hydropower-station and associated tunnels and was inaugurated in 2004, while Phase Two processes were initiated in 2010.

LHDA Chief Executive Officer Refiloe Tlali

LHDA Chief Executive Officer Refiloe Tlali

The Lesotho Highlands Development Authority (LHDA) is the implementing agency of the LHWP.

Sunday Express (SE) reporter, Billy Ntaote speaks with LHDA Chief Executive Officer, Ms Refiloe Tlali, about progress made regarding the project. 

SE: Could you please give us a brief background of the Lesotho Highlands Water Project, with more emphasis on Phase Two of the initiative?

Tlali: According to the LHWP Treaty of 1986 and Phase II Agreement of 2011, the second phase consists of two components—water transfer and hydropower. The initial hydropower component was part of the whole Phase II feasibility study which began in 2005. However, the outcome of the study was not conclusive on the hydropower component so as a result, further feasibility studies need to be undertaken. The LHDA is about to appoint a consultant to undertake these studies and bring the hydropower component to a bankable state and ensure that as part of Phase II works, power-generation through LHWP infrastructure will be increased.

SE: How soon can we expect the feasibility studies to begin?

Tlali: During the second quarter of 2016 and the studies are expected to take approximately two years to complete.

SE: How far are the procurement processes for this project?

Tlali: In April 2015, the World Bank approved a grant for the Lesotho Highlands Development Authority to conduct these further feasibility studies. In July 2015, the LHDA solicited Expression of Interest (EoI) from suitably qualified consultants. A total of 24 proposals were received and after evaluation, six consultants were shortlisted to participate in a competitive bidding process. Towards the end of October 2015, the six shortlisted consultants were requested to submit their proposals for the feasibility studies. The technical bids were evaluated in January 2016. A review of the financial bids is currently underway.

SE:  Let’s talk about the power-generation component of the project…what does it entail?

Tlali: The Phase II Agreement determined that the hydropower-generation component would comprise the Kobong Pumped Storage Scheme consisting of a hydropower station, the existing Katse Reservoir as the lower reservoir and a new upper reservoir in the Kobong valley, or any other similar scheme subject to agreement on the outcome of a feasibility study. The exact format of the hydropower component is still to be determined. Further feasibility studies are about to commence.

SE: What exactly are these feasibility studies intended to establish that was not revealed in the initial undertaking?

Tlali: The initial technical and economic feasibility studies recommended that if the Kobong Pump Storage Scheme is to be implemented, further studies should be undertaken. These further studies should include the following: a market study, an integration study, geotechnical investigations and legal and commercial arrangements. Furthermore, the studies would also entail a review of other similar options, including establishing a bankable hydropower option for Phase II that can immediately be implemented upon completion of the study.

SE: How is this feasibility study being financed?

Tlali: The Government of Lesotho has secured a grant from the World Bank to finance the studies. LHDA is the implementing agent. The LHWP Treaty and Phase II Agreement stipulate that the Government of Lesotho is responsible for financing the hydropower component of the Project and Phase II is no different.

SE: How does the feasibility study affect the water component of Phase II?

Tlali: It does not. However, the 1st prize for the parties is for the two components to be completed at the same time even if they are being developed separately.

SE: When is construction of Polihali dam supposed to be completed?

Tlali: In terms of the latest master programme, it is anticipated that the dam will be completed in 2023/24, with the water delivery set for the latter part of 2024/25.

Under Phase II, water delivery to South Africa will have the capacity to increase from 780 million cubic metres per annum up to 1 270 million cubic metres per annum. The actual deliveries will depend on the operating rules and water demand.

SE: What are the current projected costs for Phase II, taking into account the decline of the value of the Rand compared to the US Dollar?

Tlali: As at the end of May 2015, the estimated cost of Phase II’s water-transfer component was R22.9 billion at completion.

SE: As far as the dam itself is concerned, what progress has been made?

Tlali: In April 2015, a local firm called Maleka, Ntshihlele, Putsoa Joint Venture, was appointed to install the beacons to demarcate the Polihali reservoir. The construction of the beacons to mark the perimeter of the reservoir began during the winter of 2015. Construction of the more than 1 300 beacons was completed in November 2015, well ahead of time.

Following the award of the demarcation contract, the following have since been awarded:

Contract 3014 – Professional Services for the Design and Construction Supervision of the Polihali North East Access Road:  This contract was awarded in April 2015 to the SMEC-FMA Joint Venture for the upgrade and widening of the existing road to a standard appropriate to facilitate the safe movement of construction vehicles during the mobilization of the dam and tunnel contractors. FM and Associates (FMA) is a Lesotho company based in Maseru.

Contract 3015 – Professional Services for the Evaluation, Optimisation, and Site Supervision of Geotechnical Investigations:  This contract, awarded in May 2015 to Jeffares & Green (RSA company) in association with GWC Consulting Engineers (Lesotho company), pertains to the appointment of a consultant (a geotechnical engineer) who will oversee the work done by a drilling contractor.  The consultant is on site and work has commenced.

Contract 3009 – Professional Services for the Planning, Design and Construction Supervision of the Housing and Associated Infrastructure:  This contract was awarded in June 2015 to Polihali Infrastructure Consultants (Pty) Ltd, a joint venture between MottMacDonald PDNA (Pty) Ltd and Khatleli Tomane Moteane (Pty) Ltd, a Basotho-owned architectural practice. It is for the master planning, design and construction supervision of the Phase II housing and associated infrastructure.  The project housing works comprise accommodation facilities for the staff and labour force, site offices, workshops, plant yards and other work areas.  The master planning is currently underway.

Contract 4016 – Geotechnical Investigations for the Polihali Dam and Transfer Tunnel: This contract, awarded in November 2015 pertains to the appointment of a contractor who will carry out investigations to confirm the geological conditions in the ground and also identify the suitability, quality and quantity of concrete aggregate found at all investigated quarries. The contractor is on site and work has commenced.

Contract 3006 – Design and Construction Supervision of Polihali Dam and Appurtenant Structures: A shortlist of consultants has been approved and the tender process will commence shortly.

Contract 3007 – Design and Construction Supervision of Polihali Transfer Tunnel: A shortlist of consultants has been approved and the tender process will commence shortly.

SE: At what stage is the selection of a company to do the actual dam and tunnel construction?

Tlali: The LHDA’s procurement policy is designed to foster competitiveness, transparency, cost-effectiveness, quality and meaningful and broad participation of South African and Lesotho suppliers of goods and services, including consultants and contractors.

It includes a pre-qualification process for engineering services pertaining to the main works and also precludes the awarding of both the main works to the same service provider.

The pre-qualification process has yielded a shortlist of suitably qualified firms. The shortlisted consultancies will now be invited to prepare and submit their bids.

SE: When is the actual dam-construction expected to start?

Tlali: Construction is expected to commence towards the end of 2018 or beginning of 2019.

SE: What is being done to ensure adherence to the policy of awarding jobs to both Lesotho and South African companies?

Tlali: Article 10 of the LHWP Phase II Agreement says, and I quote,  the Lesotho Highlands Development Authority shall, in the procurement of all goods and services, apply and give effect to the following procedures:  all procurement processes shall foster competitiveness, transparency, cost effectiveness and quality; preference shall be given to suppliers of goods and services, including consultants and contractors, in Lesotho, South Africa, Southern African Development Community member states and then internationally, in that order, provided that the provisions of paragraph (a) shall always be satisfied, etc.

The LHDA has developed the Procurement Policy and Guidelines to promote the attainment of the preferential procurement targets stipulated in Article 10 of the Phase II Agreement.

The LHDA engaged with interested contractors and consultants prior to the commencement of the project. The Procurement Policy is embedded in the Requests for Proposals, targets are specified in contracts and preference is given consideration in the evaluation of all bids submitted. All appointed consultants and contractors are required to provide regular updates on the achievement of such targets.

Full copies of the Phase II Agreement and the LHWP Treaty can be obtained from the LHWP Website at the address http://www.lhda.org.ls/phase2/legalframework.

SE: Another key issue concerns the people living where the dam would eventually be constructed. How are their removal and compensation going to be handled?

Tlali: The Treaty stipulates that the livelihoods of people affected by the LHWP should be maintained or enhanced. The LHDA is developing compensation and resettlement programmes to ensure the affected households are fairly compensated and that physically displaced households are properly relocated and re-established.

The LHDA has taken into account, Phase One lessons pertaining to compensation and the recommendations of the Phase II Feasibility Study. It has engaged with local communities who will be affected and other stakeholders in the development of the Compensation Policy to ensure community concerns are addressed. Care has been taken to ensure communities understand the Compensation Policy and compensation process. A final round of disclosure of the Policy to affected communities and other stakeholders will occur in the first half of 2016. Compensation will be delivered in accordance with the approved Policy.

SE: How many households and other key public facilities are going to be affected?

Tlali: The implementation of Phase II will require the acquisition of land. Approximately 5 000 hectares will be flooded by the Polihali dam and reservoir in the valleys and tributary catchments of the Senqu and Khubelu rivers. The Phase II Feasibility Study estimated that approximately 1,100 hectares of this land is arable. Five villages are located below the Polihali reservoir demarcation line, a further three villages are partially below the demarcation line, while one village is located in the main site establishment area. The full extent of physical and economic displacement will be determined during the upcoming resettlement planning studies.

Compensation and resettlement programmes will be implemented to ensure that physically displaced households are properly relocated and re-established, that compensation is paid for loss of assets and productive capacity, that the livelihoods of affected people are restored, and that other impacts are mitigated in consultation with affected communities and households.

The LHDA is securing the services of experienced resettlement consultants to assist with the preparation and implementation of these programmes. Once the planning process, which will detail the full extent of physical and economic displacement and the resettlement requirements, has been completed and approved, the consultants will assist the LHDA with the implementation of the resettlement programme. The effective participation of affected communities is integral to the success of the resettlement programme.

SE: On the issue of employment, how is this going to be handled? There was a recent advertisement about jobs…

Tlali: Regarding the recruitment of personnel, Article 11 of the LHWP Phase II Agreement stipulates as follows; In addition to the requirements of Article 7(17) of the Treaty, the following provisions shall be applied with respect to the recruitment of personnel by the Lesotho Highlands Development Authority: preference shall be given to nationals of Lesotho, South Africa and Southern African Development Community member states, in that order, provided that the required skills and experience levels are met, etc.

As indicated above, full copies of the Phase II Agreement and the LHWP Treaty can be obtained from the LHWP Website http://www.lhda.org.ls/phase2/legalframework.

The recent advertisement referred to, the LHDA assumes, was purporting to be recruiting manual workers for vacancies at Polihali, among other sites. If the name ‘Polihali’ was meant to refer to the Polihali Dam in Mokhotlong that is going to be constructed by the LHDA-appointed contractor, the solicitation by these recruiters was fraudulent. The management of the LHDA has distanced itself from the said advertisement and categorically stated that the recruitment agents did not have the authority to represent the LHDA and that they were acting on their own accord.

The LHDA is in the process of finalising guidelines for the recruitment of workers especially unskilled labour. Consultations with local authorities and community structures in the Polihali area have taken place. Further consultations with other stakeholder are still on-going.

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