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Power station deal collapses

Staff Reporter

MASERU — The plan to build a hydropower station as part of the second phase of the Lesotho Highland Water Project (LHWP) is all but dead, the Sunday Express heard this week.
The hydropower station which was going to be built in Thaba-Tseka’s Kobong area was a key component of the M7 billion project which included the construction of Polihali Dam in Mokhotlong.
As the main customer of the water, South Africa is to fund the project.
The power station was going to be constructed subject to the agreement on the outcome of a feasibility study on its technical and economic viability.
This paper can however reveal that the plan collapsed after an April 25 meeting attended by Eskom, officials from South Africa’s water department, senior officials from Lesotho’s water affairs ministry and the LHWP representatives.
The main agenda of the meeting held in Maseru was the presentation of the feasibility study on the hydro-electricity project.
The feasibility study was done by a Swedish company called Sweco.
An official who was in that meeting said after Sweco had finished its presentation officials from Eskom told the meeting that the company had no plans to buy power from Lesotho.
“They were very clear that they were not interested in buying power from Kobong,” said the official who refused to be named. “They said they already have their own plans to generate power in South Africa and Kobong does not fit into those plans.”
Without the purchase agreement with Eskom there is no way that the power station can be built, the official said.
This means that the second phase of the water project will go ahead without the hydropower component.
A senior government official had told the Sunday Express that Prime Minister Tom Thabane is “extremely angry about the turn of events”.
He said the hydropower issue will be top on the agenda of the meeting Thabane will have with South African president Jacob Zuma in the next few weeks.
Lesotho, the official said, wants the power station built but South Africa is refusing.
“You need a concrete commitment from a buyer for that kind of power project and there is none for the Kobong power project,” he said.
The Kobong hydropower station was going to produce 1000 megawatts, which is 13 times more than the 140 megawatts Lesotho needs for its domestic use.
Muela Power station which was built under the first phase of the project is currently producing 72 megawatts, forcing Lesotho to get the remaining 68 megawatts from Eskom to meet its domestic demand.
The government official said the size of the Kobong power station meant that the bulk of its power was going to be exported to South Africa.
“But now that Eskom has refused to buy the power the project has collapsed.”
Initial estimates had indicated that it would have required between M6 billion and M7 billion to build the power station.
Lesotho does not have that kind of money, the government official said.
“Even if Lesotho was going to source for the funds there is no institution that would release that kind of money for a power project that is not backed by a solid purchase deal.”
There are now concerns that if the second phase of the project goes ahead without the hydropower component it would have violated the 1986 LHWP Treaty between Lesotho and South Africa.
Article 4 of that treaty which is the founding documents of the project states that the purpose of the project is enhance the delivery of water to South Africa and generate hydropower in the Lesotho.
The revelation that Eskom has no plan to buy power from Lesotho seems to have vindicated a group of youths from political parties who have argued that the power component of the second phase was a mirage from the onset.
The youth had already indicated that a top Eskom official had told them that the power company did not know anything about the Kobong power project.
The youths have been trying to push the government to renegotiate terms of the second phase of the water project which they allege is tilted in favour of South Africa.
This is not the first time that the construction of a hydropower station had been at the centre of a dispute between the two countries.
During negotiations for the first phase of the project the two countries clashed over the plan to build the Muela power station.
At that time South Africa argued that the power station will not be economically viable. They said instead of having a power station.
Lesotho can buy power from Eskom.
The Lesotho delegation said if the water project was not going to include a power station then it was not going to sign the agreement.
The World Bank, which was a major partner in the project, then told Lesotho that if it wanted to go ahead with the hydropower project then the country would have to fund it on its own.
Lesotho later got assistance from the European Union to build the station.

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