The Lesotho Highlands Water Project (LHWP) Phase 2 agreement, which would open the way for additional water and power to flow to South Africa from the mountain kingdom, would be submitted to Parliament for ratification following its approval this week by South Africa's Cabinet.
The agreement would seek to augment the original treaty, signed by the two countries in 1986, while addressing issues related to the operation and implementation of phase 2.
The water aspect of the project was likely to cost around R7.8-billion, including R2.4-billion for development of the Polihali Dam.
Capital expenditure would also be directed towards the building of tunnels worth R2-billion, new infrastructure worth R1.3-billion, engineering works worth R1.1-billion, administration costs of R335.6-million, environment expenses of R365.5-million and social costs of R363.3-million.
The government of Lesotho was also reportedly preparing to pursue a R7.6-billion hydropower project directly linked to the Phase 2 developments.
It is understood that LHWP Phase 2 could begin delivering water by 2020 for the augmentation of the Vaal System and that between 3 500 and 4 000 jobs could be generated during construction. Most of those employed would be Lesotho citizens, but it was possible that 15% of the jobs would go the way of South Africans.
The agreement that would be placed before South Africa's lawmakers would seek to allow for the development of Phase 2, which would augment the delivery of water in South Africa and also include a hydropower-generation dimension.
WIND & WATER
However, it also emerged this week that Lesotho was also aiming to pursue a larger and entirely separate scheme, known as the Lesotho Highlands Power Project (LHPP).
This initiative could involve investments of $15-billion (around R110-billion) to develop 6 000 MW of wind capacity and 4 000 MW of pumped-storage hydropower.
South African diversified industrial group Harrison & White Investments reported this week that it had joined forces with the Lesotho government to develop the LHPP wind and hydropower projects in a joint venture called Breeze Power.
Breeze Power indicated in a statement that the project would be funded through a combination of debt and equity, with the major debt partners including Chinese financial institutions.
It also said the development would be delivered in phases over the next 10 to 15 years, with the first phase consisting of a 150 MW wind farm, work on which would commence in early 2012 with commissioning a year later.
The electricity would be sold to South Africa, with Lesotho already connected to the Eskom power grid.
Breeze Power had also signed an agreement with Chinese technology partner Ming Yang Wind Power, whereby wind turbine components would be made in factories in South Africa and Lesotho. Construction of these facilities could commence early in 2012, Breeze Power said.