Standard Bank supports the Lesotho Highlands Development Authority with Phase 2 of the Lesotho Highlands Water Project

The Lesotho Highlands Water Project (LHWP) is a multi-phased project which was established in 1986 by the treaty signed by the South African and Kingdom of Lesotho governments. The project aims to provide water to South Africa’s Gauteng region, while simultaneously generating hydro-electricity for Lesotho, by harnessing the waters of the Senqu River in the Lesotho highlands through the construction of a series of dams.

The bank acted in its capacity as Issuer of Advanced Payments and Performance Guarantees  to Lesotho Highlands Development Authority (LHDA) working with Banks from China,  Botswana and Lesotho. It also facilitated discussions for the acceptance of special templates between banks in China through the SBG Beijing office for major works under the project. Standard Bank’s responsibilities in the project also included the following:

• Issuing performance and advance payment guarantees for both the tunnel and dam contracts
• Acquiring LSL, USD and EUR accounts for clients involved in the project
• Onboarding clients involved in the dam, tunnel and bridge contracts on the BusinessOnline platform

Phase 1 of the project was completed in 2003, and Phase 2 is estimated at LSL43 billion and involves the construction of the Polihali dam and reservoir, water transfer tunnel and associated access roads, bridges, accommodation, electrical transmission lines and telecommunications infrastructure. The South African government will finance with $1.87 billion to pay for the water transfer component; Lesotho will finance $213.68 million to pay for the hydro power station, and the African Development Bank will contribute $87.72 million.

With this project, South Africa will be able to keep up with the increasing demand for water from industrial, agriculture and domestic users, while Lesotho will be able to reduce its dependence on imported energy. Roughly 17 990 million cubic metres of water have been transferred to South Africa since the commissioning of the Project Phase 1 in 2004, and with Phase 2, LHWP aims to increase the transfer of water from Lesotho to the Republic of South Africa from the current 780 million cubic metres per year to 1 260 million cubic metres per year and to provide the opportunity to generate additional hydroelectric power in Lesotho.

The project will also provide secure and sustainable water sources to the population living in the Gauteng region covering 5 provinces, namely, Gauteng, Free State, Mpumalanga, North West and Northern Cape, with a combined population of 26 million and 60% of South Africa’s economy. The water delivered and transferred to the Vaal River System will ensure water availability for domestic consumption, irrigation, industries and mining. On the Lesotho side, more than 85 000 people will benefit upon completion of the project, which is bound to impact positively on community development activities and private sector growth through improved infrastructure and contribute to Lesotho’s socio-economic development.

As Africa’s largest bank by assets, Standard Bank recognises that South Africa and Lesotho are inextricably linked socially and economically, and we are proud to have an opportunity to leverage our expertise and extensive African footprint to participate in a project that will result in the positive development of 2 African countries.