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WATER

The Lesotho highlands are one of the region’s principal water catchment areas, and the source of three major river systems – the Senqu, Mohokare (Caledon) and Makhaleng. These abundant water resources, when combined with Lesotho’s high altitude and geographic proximity to major demand centres in southern Africa, have proven to be a valuable natural asset that is both renewable and sustainable. Rainfall together with winter snowfalls provides an estimated 5.5 billion cubic metres of water annually and renewable groundwater resources of some 340 million cubic metres per year.

The landmark Lesotho Highlands Water Project (LHWP) enables the transfer of water from the highlands of Lesotho to the economic powerhouse of the African continent in Gauteng, South Africa, while also contributing to the development of hydropower resources. Royalties earned from the export of water have become the largest single source of non-tax revenue in the country, and the start of the LHWP Phase II has reinforced the vital role of this precious commodity in Lesotho’s economy.

While Lesotho’s water resources exceed national requirements, limited access to these resources has been an obstacle to growth and development as well as efforts to stem waterborne diseases. This is especially pertinent for the capital city of Maseru and its surrounding areas, which are the site of the majority of textiles and light manufacturing firms.

Lesotho has made substantial progress in the past decade on improving water supply and sanitation facilities. According to the latest available data, 50.9 percent of Basotho households have access to improved sanitation facilities, while 77 percent of rural residents and 95 percent of urban residents have access to an improved water source.

The construction of water supply and sanitation facilities is ongoing in both urban and rural areas during 2017/18, and includes projects such as Tsikoane Water Supply and Sanitation Scheme, Metolong Dam and Water Supply Programme and Katse-Matsoku-Lejone Water Supply and Sanitation Project. While the Metolong Dam has greatly enhanced domestic water supply, detailed design of the remaining modules of the project are being undertaken to ensure that water is supplied to additional locations. This includes a feasibility study of future multipurpose dams.

The Ministry of Water is presently working to complete the review of the Water and Sanitation Policy of 2007 and Water Act of 2008. The Ministry also continues to prioritise integrated catchment (wetland) management to ensure sustainability of water resources and reduction of soil erosion, and is preparing the Integrated Catchment Management Plan.

Improving the country’s national water resources infrastructure and increasing water security in an environment that is climate-insecure, is central to boosting the Government’s efforts to promote long-term sustainable macroeconomic development, including food security and job creation. The 2016 World Bank report ‘Lesotho Water Security and Climate Change Assessment’ evaluates the vulnerabilities, challenges and opportunities in the country’s water management system.

Simulations show that continued development of existing water infrastructure is critical to improving the reliability and resilience of the domestic and industrial sectors. Exploring interconnections between water resources developed through the LHWP and linking these to address domestic and industrial demands in the lowlands could help improve the resilience of the existing system. Furthermore, the implementation of additional phases of the LHWP will increase transfer capacity as well as acting as a major job creator in the construction sector.

In March 2017, the Global Environment Facility (GEF) approved the release of US $4 million to complement US $17 million from the African Development Bank (AfDB) to fund Lesotho’s water supply and sanitation projects. The funding, which was mobilised under the Least Developed Countries Fund (LDCF) of the GEF, is expected to address constraints in Lesotho’s water and sanitation sector related to increasing populations in the peri-urban areas; economic growth and higher demand; geographical isolation; lack of public utilities and regulation; high cost of water provision; and the water stress caused by increasing climate change and variability.

Water management

The management of Lesotho’s water systems falls under the Ministry of Water, which was created in 2015. The Department of Water Affairs (DWA) keeps and provides records, information, results of monitoring activities research and analyses to the offices of the Commissioner of Water (CoW), who acts as the custodian of raw water resources. The Department of Rural Water Supply (DRWS) provides small settlements with water, while the operation and maintenance of these schemes is the responsibility of local authorities and committees.

Provision of potable bulk water supply to urban areas is undertaken by the Water and Sewerage Company (WASCO) under the licence issued by the Lesotho Electricity and Water Authority (LEWA). The regulator oversees services provided by WASCO, which operates several river intake works, water treatment and wastewater treatment plants, and their associated bulk water transfer systems into bulk water storage tanks.

The Lesotho Highlands Development Authority (LHDA) operates and maintains the Lesotho Highlands Water Scheme dams (Katse and Mohale), raw water transfer system and the ‘Muela hydropower scheme within Lesotho, while its counterpart, the Trans-Caledon Tunnel Authority (TCTA), is responsible for the South African side. The Lesotho Highlands Water Commission (LHWC) was established to provide a joint oversight of the implementation of the LHWP on behalf of the two governments. It has monitoring, advisory and approval powers in respect of the activities of the LHDA relating to the LHWP in Lesotho and activities of the TCTA relating to the operations and maintenance of the project in
South Africa.

Supplying the lowlands

The Metolong Dam and Water Supply Programme (MDWSP), which forms the first phase of the Lesotho Lowlands Water Supply Scheme, has made an average of 75 000 cubic metres of treated water per day available to the centres of Mazenod, Roma, Morija, Teyateyaneng and Maseru, where it will meet domestic and industrial requirements for approximately 40 years. It was given priority within the overall scheme as it serves the greatest number of end users, and the communities and industries that it supplies had the most urgent need of upgraded water supply systems.

The MDWSP includes water treatment works and a downstream conveyance system, with a water reticulation component that is operated by WASCO and a wastewater project that deals with liquid waste from industry. Apart from guaranteeing a reliable water supply to thousands of people in the Metolong catchment area, the programme will leave long-lasting benefits for the communities along the pipeline route who have been directly affected by the construction, with a total of 40 villages in the catchment area being supplied with water and sanitation services.

Tertiary pipelines constructed as part of the MDWSP include branches and take-offs at specific points along the pipeline routes to facilitate future distribution of potable water to the surrounding communities. This infrastructure is being linked to components of the Rural Water Supply and Sanitation Project in the districts of Berea and Maseru, benefitting some 65 000 inhabitants of the area.

Award winning pedestrian bridge at Metolong Dam © Metolong Authority

The Lesotho Water Sector Improvement Project Phase II is being implemented by the Lesotho Lowlands Water Supply Scheme Unit. It encompasses development of the next least-cost, longer-term solution to supply water to the lowlands (Maseru, Roma, Morija, Mazenod, Teyateyaneng) along with distribution network expansion, continued reforms within the sector, and scaling up of community water supply systems within an environmentally sustainable, socially responsible and economically viable framework. World Bank funding will go towards the Teyateyaneng extension of the conveyance system, the MDWSP environmental and social management programme, and continued institutional and policy support to the water sector.

The Lesotho Water Sector Improvement Project Phase II is being implemented by the Lesotho Lowlands Water Supply Scheme Unit. It encompasses development of the next least-cost, longer-term solution to supply water to the lowlands (Maseru, Roma, Morija, Mazenod, Teyateyaneng) along with distribution network expansion, continued reforms within the sector, and scaling up of community water supply systems within an environmentally sustainable, socially responsible and economically viable framework. World Bank funding will go towards the Teyateyaneng extension of the conveyance system, the MDWSP environmental and social management programme, and continued institutional and policy support to the water sector.

The programme, ‘Climate Change Adaptation for Sustainable Rural Water Supply in the Lowlands’ will be financed by GEF for an indicative amount of US $4.4 million and co-financed by the AfDB to the tune of US $17 million.

The main objective of the Tsikoane Water Supply and Sanitation Project is to improve the health and living conditions of communities in the Tsikoane area through the development of sustainable water supply and sanitation services. Being implemented by WASCO with a price tag of M8 million, the water supply system is designed to serve a projected population of over 18 000 by 2035. The project includes, among others, construction of a reinforced concrete bulk reservoir as well as collection tanks, pumping and gravity mains, a reticulation system, pump house and operation buildings, and 2 500 Ventilated Improved Pit (VIP) latrines.

Funded by the Government of Lesotho, BADEA, OFID and the Saudi Fund, the Five Towns Water Supply Project involves water supply improvement in the five towns of Botha-Bothe, Hlotse, Mafeteng, Mohale’s Hoek, and Qacha’s Nek. The improvement entails construction of river intake works, water treatment works, pumping stations, transmission mains, distribution mains and reservoirs. The  Three Towns Water and Sanitation Project is being implemented by WASCO with a budget of M15.25 million.

Urban and peri-urban water supply

Rapid urbanisation in the capital has seen city boundaries shift substantially, putting pressure on WASCO to extend the supply services to areas not previously within its territory. Following the commissioning of the MDWSP, WASCO is now able to produce adequate water to meet the increasing water demand, provided distribution network challenges in these areas are addressed.

Intended to supply those parts of Maseru which currently do not have access to clean water, the Greater Maseru Water Supply Programme covers feasibility and preliminary design of water distribution networks and all associated infrastructure in the three packaged areas. These comprise: South (Masana, Mazenod, Ha Luka, Bosofo, Lenono and Makhoathi); South-West (Tsiame, Ha Tikoe, Ratjomose/Lesia, Tsautse and Qoaling); and North-East (Maqalika, Mabote, Tsenola, Foso, Marabeng and Berea).

The initial study, which was undertaken with a grant from BADEA, examined the technical, financial and economic feasibility of providing water to these areas as well as developing preliminary water supply designs for a planning horizon of 2040. The findings of the study revealed that embarking on water supply projects in the selected areas would be economically viable, as clean water will not only improve the health status and productivity of the residents, but also their livelihoods. The project is currently awaiting financing for the detailed design and construction supervision.

The residents of Ha-Foso and Marabeng in Berea district are to be given access to clean water, thanks to the Drought Relief Water Supply Project, a joint effort between the Ministry of Water, WASCO and the Disaster Management Authority (DMA). The project was introduced by Government in response to the 2015/16 El Niño-related drought that affected the greater part of southern Africa. This complements efforts to provide water to urban dwellers through the Greater Maseru Water Supply Programme.

The Maseru Waste Water Project is funded by the Government of Lesotho (M25 million) and BADEA (M35 million) and implemented by WASCO. The aim is to provide a modern, environmentally friendly system of wastewater collection and treatment within the administrative boundaries of Maseru, and the project consists of rehabilitation and extension measures for the improvement of the wastewater collection, treatment and disposal systems in town areas where a piped sewerage system exists or proves justified.

Rural water supply and sanitation

The Department of Rural Water Supply is presently implementing the Rural Water Supply and Sanitation Project which has the objective of improving the health and livelihoods of Basotho living in rural areas. This will be achieved through increased and sustained access to improved domestic water supply and sustained access to improved latrines, as well as cultivating better hygiene practices among beneficiary communities. In total, the scheme comprises 79 water supply systems and 11 140 VIP latrines in villages across Lesotho. The project budget stands at M75.819 million. Progress on all water systems under construction is at 63 percent.

Mohale Dam © Anne Wade

The Village Water Supply Project, which is also implemented by the Department of Rural Water Supply, has a budget of M30 million. The main activities include maintenance of existing rural water systems and their rehabilitation, as well as construction of new water supply systems and VIP latrines.

The Katse-Lejone-Matsoku Water Supply, Sanitation and Refuse Disposal Programme has a budget of M15 million and is being implemented by the LHDA. Its aim is to protect the water quality of the Katse reservoir and to improve livelihoods by providing the communities upstream of the reservoir with potable water through the construction of gravity-fed water supply systems, sanitation facilities and refuse disposal facilities. By the first quarter of 2017/18, construction had been completed on 17 water supply systems and was ongoing on a further three.

Lesotho Highlands Water Project

An African success story, the Lesotho Highlands Water Project (LHWP) is a multiphase initiative established by a 1986 treaty between Lesotho and South Africa, and one of the most ambitious engineering projects ever undertaken on the continent. It has proven to be a winning cross-border water collaboration scheme, contributing significantly to the promotion of sustainable economic growth, reduction of poverty and improvement in the livelihoods of Basotho and South Africans.

Involving the construction of dams and tunnels in the two neighbouring countries, as well as the generation of hydropower, the water transfer scheme provides water for South Africa’s domestic and industrial use, with Lesotho reaping the rewards of associated infrastructure (roads and hydroelectricity) and royalties. In its totality, the LHWP consists of five large dams implemented in four phases and eventually transferring 70 cubic metres of water per second to South Africa.

Phase I of the LHWP included the construction of Katse and Mohale dams, ‘Muela hydropower-station, and associated tunnels and reservoirs, and was inaugurated in 2004. The transfer scheme sees water travelling from a network of reservoirs at Mohale, Katse and ‘Muela through the trans-Caledon tunnel and then into the Vaal Dam in Gauteng – South Africa’s industrial heartland.

Phase II of the LHWP entails the construction of the Polihali Dam at Tlokoeng in Mokhotlong below the confluence of the Khubelu and Senqu rivers, as well as additional transfer tunnels feeding water to the Katse Dam. Once completed, this will enable water delivery capacity to rise from 780 million cubic metres per annum to some 1 270 million cubic metres per annum, dependent on the operating rules and water demand. Pending the outcome of further feasibility studies, a hydropower component in the form of a pumped storage scheme may also be constructed.

Not only will Phase II of the LHWP guarantee a reliable and cost effective water supply for South African industry, it will also see Lesotho benefit from increased royalty revenues and electricity generation capacity.

LHWP Phase II was launched in March 2014, and the focus has subsequently been on procuring consultants for its implementation. While initial activities concentrated on advance infrastructure works (access roads, bridges, telecommunications, electrification and project housing), the core water transfer components are now in the spotlight.

The main contract, which is for the design and construction supervision of the dam, was awarded in July 2017 to Matla a Metsi Joint Venture for M445 million. Construction of the dam is scheduled to begin in December 2019 or January 2020 (by which time most of the advance infrastructure will have been completed) and the first water delivery to South Africa should take place early in 2025.

The estimated cost of Phase II’s water-transfer component is M22.9 billion. In respect of the recruitment of personnel by the LHDA, preference is being given to nationals of Lesotho, South Africa and the Southern African Development Community (SADC) member states, in that order, provided that the required skills and experience levels are met.

Particular attention is being given to the relocation of the 2 500 people affected by the dam construction, with the LHDA developing compensation and resettlement programmes to ensure that those affected are fairly compensated and that physically displaced households are properly relocated and re-established. The Authority has engaged with local communities and other stakeholders in the development of the Compensation Policy to ensure community concerns are addressed and that such communities understand the compensation process.

LESOTHO ELECTRICITY & WATER AUTHORITY

The Lesotho Electricity Authority Amendment Act of 2011 was passed in order to broaden the mandate and scope of the former Lesotho Electricity Authority (LEA). This saw the creation of the Lesotho Electricity and Water Authority (LEWA), which in 2013 assumed responsibility for regulation of the Water and Sewerage Company (WASCO) in addition to the Lesotho Electricity Company (LEC).

Activities regulated by LEWA thus encompass the generation, transmission and distribution of electricity, and the supply as well as import and export of electricity, not to mention the regulation of the following urban water and sewerage services: water treatment, production, transmission, distribution and supply, storage of water for treatment, distribution or onward supply, the delivery of water to trunk or main pipelines, and the treatment and disposal of wastewater by the sewerage system.

LEWA’s prime responsibility is to ensure that water and electricity are provided to industry and business, as well as domestic, public and government consumers, private education and health institutions, in a manner that is affordable, reliable and cost effective. This entails putting mechanisms and policies in place that encourage, promote, monitor and evaluate local private sector participation in the efficient financing and timely construction of water and electricity programmes, as well as the collection of data on water and electricity schemes in all constituencies. LEWA also protects the interests of all consumers of electricity, water and sewerage services in relation to access, quality and price of service, and makes appropriate recommendations to Government.

Important developments under LEWA include its administration of the Universal Access Fund, preparation of legal and regulatory frameworks for both electricity and urban water and sewerage services, and sound financial management strategies. Furthermore, the Authority has developed and implemented mechanisms to expedite the resolution of customer complaints.

LEWA’s 2014-2019 Strategic Plan takes into account its broadened scope of services. A set of incremental activities and projects form part of its planned strategic initiatives, with the focus on harmonising roll-out of strategies.

As the roles and responsibilities of the various key players in the energy sector are not clearly defined, a bridging programme by the EU under the National Indicative Programme (NIP) of the 11th European Development Fund (EDF) has been proposed to assist in addressing this issue. The EDF, which runs from 2015 until 2020, identifies the focal areas of water, energy and governance for development cooperation, with €142 million having been set aside for the implementation of projects in these areas. Some €28 million is earmarked for energy production, electrification, conservation and efficiency, and €78 million for the expansion of water supply and sanitation infrastructure and rain water collection.

ENERGY

The Department of Energy (DoE), which operates under the Ministry of Energy and Meteorology, is tasked with managing and administering the energy sector in Lesotho as well as developing policies and strategies to ensure the security of such supplies and services. The Rural Electrification Unit (REU) is mandated to develop, operate and maintain transmission and distribution networks as well as rural electrification.

Lesotho is well placed to expand its production of indigenous renewable energies, with an estimated 14 000 megawatts of hydropower potential in addition to substantial wind and solar resources. However, the energy sector is currently characterised by a reliance on biomass (wood and dung) and imported coal and petroleum.

Electricity makes up only 4 percent of Lesotho’s energy balance, and as of 2016 there was a household connection rate of 38 percent. The rest of the population relies on multiple fuel sources to meet their energy needs. Government has set targets to expand the electrification rate to 50 percent of the population by 2020, along with ensuring security of supply using locally available renewable energy resources (a targeted 200 megawatts) and constructing strategic fuel reserves and regional depots to assist other sectors of the economy.

The 2016 Population and Housing Census shows that household penetration of electricity in Lesotho is 59.7 percent in urban areas, 52.3 percent in the peri-urban areas and 14.2 percent in the rural areas.

Access to electricity is predominantly enjoyed in urban areas, where about 60 percent of households are connected to the network. The country’s mountainous landscape and remoteness of rural settlements results in high grid extension costs, and access to electricity in these areas is just over 14 percent. In rural locations, biomass is used for cooking and heating, and candles and paraffin for lighting. By contrast, urban households rely less on biomass and more on paraffin and gas for heating and cooking, while they use a combination of electricity, paraffin and candles for lighting.

Electricity demand (a significant proportion of which comes from manufacturing and the garment industry) currently outstrips supply, and Lesotho imports about 35 percent of its annual electricity needs. While the ‘Muela hydropower plant has a capacity of 72 megawatts, peak demand for electricity in 2016 was about 153 megawatts, and is expected to grow to 304 megawatts by 2020 and 432 megawatts by 2030.

Developed by the DoE, Lesotho’s Energy Policy (2015-2025) aims to make energy universally accessible and affordable in a sustainable manner, with minimal negative impact on the environment. The policy provides for the participation of public agencies, non-governmental organisations (NGOs), research and training institutions, private organisations and development partners, among others. Local private partners are invited to become involved in energy initiatives, with the new policy stipulating 50 percent domestic participation. This includes the distribution and transportation of petroleum.

The Strategic Plan for the Ministry of Energy and Meteorology (2015/16-2020/21) focuses on climate change mitigation and adaptation strategies which include national sustainable energy initiatives. The Sustainable Energy Strategy and Action Plan (2018-2022) has been developed to assist in the implementation of the Energy Policy.

The electricity supply industry

The electricity supply industry in Lesotho is dominated by two state-owned entities. The Lesotho Electricity Company (LEC) is the monopoly transmitter, distributor and supplier of electricity, while the Lesotho Highlands Development Authority (LHDA) is the main generator of electricity through its 72-megawatt ‘Muela Hydropower Plant, which is part of the Lesotho Highlands Water Project. There are also some small hydro projects providing generation capacity totalling around 4 megawatts. Indigenous generation sources are supplemented by imports from South Africa (Eskom) and Mozambique (EDM).

Changes took place in the electricity industry in the post-2000 period when, as part of its programme to restructure state-owned assets, the Government decided that LEC would be privatised while ‘Muela would be ring-fenced within the LHDA to ensure that its costs were known. The LEC is responsible for electrification within its service territory, with rural electrification efforts currently managed by the Rural Electrification Unit of the Department of Energy. A Universal Access Fund disburses monies in order to subsidise the capital costs of electrification in the country, with the goal of facilitating the development and expansion of electricity service infrastructure.

Puma Energy

Puma Energy is a midstream and downstream petroleum company which operates across five continents in 47 countries, including Lesotho. One of the largest independent storage and downstream companies in Sub-Saharan Africa, it operates from more than 662 retail sites and 29 airports in the region, and provides deliveries to industrial and commercial customers in some of the most remote areas.

Puma Energy is a well-resourced and well-managed business, with global know-how of the fuel industry and an understanding of the challenge of delivering sustainable growth in both emerging and mature markets. Its key success factors include: wise and decisive investments; operating in strategic locations; operating efficiently; employing talent; and being responsive and flexible.

Puma Energy LS (Pty) Ltd entered the Lesotho market in October 2016 through acquisition of Exel Petroleum Lesotho. In addition to owning and operating a fuel terminal of 1 200 cubic metres in Maseru, the company has a footprint of 22 retail sites, situated predominantly in the lowlands of the country. Furthermore, Puma Energy LS supplies various customers outside of its retail chain, in sectors such as mining, construction (buildings and roads), transport and independent business.

Expanding electrification

Accelerating the electrification programme is a key policy tenet of Lesotho’s Government. In addition to its focus on renewable and sustainable energy sources which have limited negative impact on the environment, the Ministry of Energy and Meteorology is committed to fast-tracking electrification projects and electricity connections.

The LEC’s annual target of connecting 15 000 new customers to the electricity grid annually has been met and exceeded countrywide, with 15 608 household connections achieved in 2016/17 compared with 14 215 in 2015/16. This brings total household connectivity to around 40 percent.

Recently completed transmission projects include the construction of a 33kV line from Metolong to St Agnes, installation of a transformer at Mazenod substation, upgrading of transformers at Maputsoe substation as well as re-commissioning of the Litšoeneng substation in Mohale’s Hoek. In addition, a feasibility study to determine the viability of building a 132kV line from Mazenod to Qacha’s Nek via Semonkong, to connect these areas to the national grid, has been completed.

For 2017/18, the energy sector has been allocated a sum of M316.5 million. Of this amount, M169.0 million was set aside for the connection of 10 000 households in Leribe and Botha-Bothe to the power grid, through the BADEA-funded Northern Districts Electrification Project, while rural electrification received a budget allocation of M147 million.

A M151.76 million loan agreement from the AfDB in 2017 is financing the Urban Distribution Rehabilitation and Transmission Expansion Project, which aims to rehabilitate 188 kilometres of distribution lines and switching stations and expand the transmission network through upgrading a substation and building 8 kilometres of transmission lines. The networks include Quthing to Mohale’s Hoek, Roma to Thaba-Tseka, Maseru, Teyateyaneng, Botha-Bothe and Letšeng Diamond Mine in Mokhotlong.

Improving access to electricity for rural communities continues to be a major challenge. Even though Lesotho is a relatively small country, around two-thirds of its land area comprises mountainous terrain which is sparsely inhabited. The majority of rural villages lack electricity and the probability of connecting them to grid electricity in the foreseeable future is very low, given the commercial nature of grid electricity and the generally low income levels among the population.

Energy sector initiatives are currently focused on increasing access to electricity in remote areas through the development of private sector led off-grids and energy trading centres.

The Rural Electrification Programme was launched in October 2017 in the three villages of Ha Sofonea, Ha Majara and Ha Tonki in Thaba-Bosiu. Being undertaken at a cost of M6 million, this represents the first phase of the project and will benefit 545 households. The project will be extended to other rural villages across Lesotho in due course, with the aim of electrifying 7 000 rural households per year.

To enable a community to be electrified, there has to be a village or community electricity scheme, spearheaded by a committee, with each family paying a minimum deposit of M500.00 to be connected. The balance of the cost (M1 500.00) is paid either on a monthly basis for a period of seven years, or by a pre-determined surcharge each time that electricity is purchased.

Renewable energy

Lesotho is fortunate to have an abundance of solar, wind, and hydropower resource potential that well surpasses its relatively modest energy needs. Realising the potential of these resources is a focus of the Government’s Vision 2020 strategy, and investment in renewable energy is viewed as a means for addressing many of the energy sector challenges faced by the country. Increased generation capacity from utility-scale solar PV, wind and hydropower could reduce Lesotho’s dependence on imports from South Africa, while decentralised technologies powered by solar, wind or biomass could bring access to modern energy services to the Basotho who currently rely on biomass and kerosene to meet their energy needs.

Approved for implementation in 2016, ‘Development of Cornerstone Public Policies and Institutional Capacities to Accelerate Sustainable Energy for All’ is a Global Environment Facility (GEF) project. Its aim is to develop financial regulatory systems to catalyse investments in renewable energy-based mini-grids and energy centres, thus reducing GHG emissions and contributing to the achievement of Lesotho’s Vision 2020. Government is also developing the Low Emission Investment Plan to facilitate the deployment of renewable energy technologies.

Lesotho is eligible for funding under the World Bank’s Scaling Up Renewable Energy Programme in Low Income Countries (SREP), which provides financing for renewable energy technologies, including solar, geothermal, wind, small hydropower (below 10-megawatts per site) and bioenergy. The SREP Sub-Committee allocated Lesotho an envelope of US $30 million in this regard. An investment plan has been prepared with input from the World Bank, International Finance Corporation (IFC) and AfDB, and was published for public consultation in November 2017.

The plan includes an assessment of technical potential for various renewable energy technologies that can be used in Lesotho. These include:

  • Utility-Scale Solar PV – 118 megawatts
  • Utility-Scale Wind – 2 077 megawatts
  • Small-Scale Hydro – 36 megawatts
  • Waste-to-Energy (city waste) – 10 megawatts
  • Solar Micro-Grids (solar battery) – 31 megawatts
  • Floating Micro-Hydro – 0.50 megawatts
  • Solar Home Systems (solar battery) – 1.2 megawatts
  • Micro-Solar Technologies – 38 megawatts

Each of these potential resources has been evaluated against national and SREP criteria, and prioritised accordingly, with Government favouring technologies that result in job creation, improve energy security, and promote increased private sector investment. SREP funds will be used to support investments in three on-grid technologies (solar, wind and small hydro) and three off-grid technologies (micro-grids, solar home systems and improved cook-stoves). The programme consists of two core investment-focused components and a third technical assistance component.

For the first component, it is proposed that SREP resources be used to finance the development of a 20-megawatt solar PV plant – the first commercial utility-scale plant in Lesotho. This has been chosen as utility-scale solar is competitive with imported energy and is economically and financially viable. By contrast, wind is economically viable, but only financially viable with subsidies. The economic viability of small hydropower plants is site-specific, and they require subsidies to be financially viable

Covered with solar panels, Vodacom’s new Maseru headquarters is carbon neutral, powered by renewable energy, and ranks as the biggest ‘green’ building in Lesotho.

One of the three transformers at Mazenod Transmission Substation rated at 40MVA 132/33kV © Lesotho Electricity Company

As regards the second component, SREP resources would be used to finance the development of 9-megawatts of solar PV-battery hybrid micro-grids through an off-grid concession scheme. The SREP would also finance the development of 0.77-megawatts of solar home systems (SHS), other solar technologies, and improved cook-stoves (ICS). Micro-grids are competitive with diesel generators, but the cost might still be too high for rural customers. On the other hand, ICS pay for themselves within a few months because of offset fuel costs, and they are economically and financially viable if investment is financed. SHS needs subsidies to be affordable, and although solar pumps are competitive with diesel pumps, it is unclear if other solar technologies are also competitive.

Relating to the third component, US $3.6 million in SREP grants would be used for: an AfDB-managed renewable energy integration study (US $0.6 million); World Bank managed site specific prefeasibility studies; and project preparation (US $1.5 million).

Future initiatives

While the outcome of the initial Lesotho Highlands Water Project (LHWP) Phase II feasibility study was not conclusive in respect of the hydropower component, the Kobong Pump Storage Scheme was identified as the most likely option. This 1 200-megawatt scheme would consist of a hydropower station, the existing Katse Reservoir as the lower reservoir and a new upper reservoir in the Kobong valley. It could potentially cover the future domestic demand of peak and intermediate loads for Lesotho, as well as allowing for the export of peak energy.

A consultant was engaged in the latter part of 2016 following technical and economic feasibility study recommendations that further studies should be undertaken before the exact form of the hydropower component was decided. The report on these studies, which include a market study, an integration study, geotechnical investigations and legal and commercial arrangements, should be submitted in the first quarter of 2018. The aim is to bring the hydropower component of the LHWP to a bankable state, with other options similar to the Kobong scheme also being reviewed. A design phase will follow the study, with construction expected to begin in 2021.

A 20-megawatt Solar PV Project (discussed under the SREP investment plan) is expected to become the first such utility-scale solar project in Lesotho, with the power generated to feed into the national grid in Mafeteng. This follows the approval of a US $695 500 grant to NEO I SPV, a subsidiary of IPP OnePower Lesotho. The grant comes from the AfDB-managed Sustainable Energy Fund for Africa (Sefa) to support the structuring of the project and lead it to bankability. This is intended to be a reference solar PV project for the SADC region. The Sefa funding goes towards technical and financial services, environmental and social impact assessment, lenders’ due diligence and risk allocation.

Managed by the African Development Bank, Sustainable Energy Fund for Africa (Sefa) supports the sustainable energy agenda in Africa through grants to facilitate the preparation of medium-scale renewable-energy generation and energy efficiency projects; equity investments to bridge the financing gap for small- and medium-scale renewable energy generation projects; and the public sector to create an enabling environment for private investments in sustainable energy.

Contributing about 13 percent to Lesotho’s maximum system demand of some 150 MW, the project will contribute to a strategic phase-out of costly power imports, thereby decreasing retail electricity prices in Lesotho. It will also decrease greenhouse gas (GHG) emissions by reducing imports of thermal-generated power from South Africa, and support rural development by stabilising the grid in Mafeteng province.