Johannesburg- South Africa’s long-delayed multibillion-rand Lesotho Highlands Water Project, which has been hamstrung by funding pressures, this week received a shot in the arm after the African Development Bank (ADB) head honchos approved a sizeable loan for second phase of the project.
The ADB’s board of directors on Tuesday said it had approved a loan of $86.72-million (R1.3-billion) to help finance the project. The project diverts water from the Senqu River system in Lesotho to South Africa’s Gauteng.
The news will come as a relief to Gauteng businesses and citizens. Rand Water, the province’s water entity, last month warned that demand is overstripping supply in the country’s economic hub.
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The two main objectives of the multibillion-rand project are to contribute to South Africa’s economic development by providing the country with a supply of low-cost, high-quality water to meet the household and industrial water needs of Gauteng.
The other goal is to contribute to Lesotho’s economic development by using the water transfer system to increase Lesotho’s capacity for generation of electricity.
The ADB said the South African government will fork out $1.871-billion as well as a loan guarantee towards the project. The first phase of the project was completed in 2004.
Phase 2 has a price tag of about R33-billion and is funded off-budget, meaning funds are borrowed from financial markets. Beth Dunford, the ADB vice president for agriculture, human and social development, said the project is expected to add value to 26 million South Africans and 85 000 Basotho.
“The two governments’ [Lesotho and SA] partnership on this project around the shared water resources from the Orange-Senqu River Basin serves the interests of their mutual development agenda and also deepens regional integration,” she said.
“The intervention will be the first major project to be financed by the bank in the water sector in South Africa, and it will complement the bank’s current support in the energy and transport sector, diversify the bank’s portfolio and consolidate the bank’s strong partnership with the country.”
The loan comes just four months after the Trans-Caledon Tunnel Authority concluded funding agreements to the tune of R15.4-billion with SA banks and the Development Bank of Southern Africa.
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