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Lesotho secures M151m for power project


Finance Minister Tlohang Sekhamane and AfDB Director General Dr Tonia Kandiero signing the agreements as Energy Khotso Letsatsi looks on

Bereng Mpaki

THE government has inked a US$10.6 million (about M151 million) loan agreement with the African Development Bank (AfDB) to finance the rehabilitation and expansion of power distribution networks and stations across the country.

The agreement, which was signed by Finance Minister Tlohang Sekhamane and AfDB Group Regional Director Dr Tonia Kandiero in Maseru on Friday, will finance the Urban Distribution Rehabilitation and Transmission Expansion Project that is expected to kick off in the next six months.

Consisting of the refurbishment of switching stations and transmission lines, the project also entails construction of an 8km, 132kV transmission line and expansion of the Khukhune substation. Improving the reliability and quality of electricity supply to existing and new customers in Lesotho are among the objectives of the project.

The upgrade of the electric power distribution system is expected to result in the reduction of losses and outages by two percent and 25 percent respectively, and an increase of five percent in the system availability.

The rehabilitation of the switching stations in the main load centre, Maseru, is expected to reduce interruptions in supply and have positive impacts on the entire countywide distribution network. This would enable expansion of access to various parts of the country in the short-term.

The project will be implemented through the Lesotho Electricity Company (LEC), a government agency responsible for power generation, distribution and transmission.

Speaking at the signing ceremony, Mr Sekhamane said many lives would be improved through the project, which will cover transmission lines between Quthing to Mohale’s Hoek, Roma to Thaba-Tseka, Maseru, Teyateyaneng, Butha-Buthe and Letšeng Diamond Mines in Mokhotlong.

“Energy remains one of Lesotho’s priority sectors as it is critical for growth and socio-economic development of our country,” he said.

“A vast area of our land, especially in the rural areas, is not connected to electricity and this poses serious difficulties to the livelihoods of our people.”

Mr Sekhamane said the project would benefit Lesotho’s various economic sectors by improving the availability and reliability of electricity.

“It is important to note that as electricity touches all economic sectors in one way or another, this project is going to be an extremely critical input to these sectors, particularly the mining sector. Indeed, the livelihoods of households will also be greatly improved,” he added.

For her part, Dr Kandiero indicated the decision to provide the loan was informed by the need to achieve the Sustainable Development Goals and United Nations Conference on Climate Change, which prioritise universal access to reliable and modern energy services. 

Dr Kandiero said energy was critical in accelerating the pace of economic transformation and unlocking potential business.

“The bank approved this loan facility of US$10.6 million to assist the government in the rehabilitation of 188km of distribution lines and 13 switching stations, expansion of the transmission network through the upgrade of a substation and construction of 8kms of transmission lines; to support the government’s national electricity access target of 50 percent by 2020,” she said.

The electricity sector in Lesotho is characterized by inadequate electricity production, transmission and distribution capacity and a low access rate. In July 2015, the national access rate was 38 percent, with the households mostly located in urban areas and only six percent of rural households with access.

Dr Kandiero also pointed out that the project was expected to create 140 jobs during the construction stage and also make Lesotho less reliant on power imports.

“The project will also facilitate the participation of private sector players in renewable energy generation through the preparation of the ‘Energy Resource Map and the Cost of Service Study’ which will recommend a sustainable tariff structure for the sector,” she added.

AfDB will fund 82 percent of the project costs supported by an 18 percent contribution from the government of Lesotho through LEC. The loan will be used to fund the foreign and local costs of the transmission upgrade and distribution system rehabilitation component. It will also bankroll the cost of service study and the project supervision and management consultant.  

Through LEC, the government will finance the balance of project components. These include under project management cost, a youth apprenticeship programme under which LEC will allocate five apprenticeship/internship positions.

The interns will be associated with the project for a minimum of six months and during this time gain experience and job exposure. At least 50 percent of the apprenticeships opportunities will be allocated to qualified women.

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