Learning curves - experience from Lesotho

16 February 2004

Although the Lesotho Highlands project has attracted negative publicity over its environmental impact, the scheme’s shortcomings provide learning opportunities, which highlight the need to award contracts fairly, says Neil Ford

SOUTHERN AFRICA has played host to two of Africa’s most ambitious water schemes but public reaction to the developments has differed greatly. Although the Komati Basin scheme has received little international attention, Swazis seem to accept that the loss of land is balanced by the irrigation water and power supplied by the dam project. Yet the larger Lesotho Highlands Development Project (LHDP) has attracted negative publicity, both for the financial irregularities surrounding the award of contracts and because of the impact on Lesotho.

As with so many other facets of life for Swaziland and Lesotho, the two projects are closely tied to political and economic relations with South Africa. Not only has the regional giant provided much of the financial backing required to support the initiatives, but rising South African demand for power and water prompted the two schemes in the first place.

The difference in scale between the two projects is highlighted by the markets they are intended to serve. While the Lesotho Highlands project was drawn up to supply water to South Africa’s financial and industrial core in Gauteng Province, centred on Johannesburg, the Komati Basin project has been designed to supply far smaller power and water markets around the Swazi, South African and Mozambican borderlands.

The facts and figures of the LHDP have been much documented. Planning on the US$8B scheme began over 30 years ago and construction of the first tunnels and dams in the Maloti section of the Drakensberg Mountains in the Lesotho-South African borderlands began at the end of the 1980s. While South Africa benefits in terms of improved water supplies, Lesotho mainly benefits from water revenues. It is estimated that LHDP revenues now account for a massive 13% of the country’s GDP.

However, far less is known about the Komati initiative. While the Lesotho Highlands project has been mainly developed to supply water to South Africa in return for payments to the government of Lesotho, the Komati Basin scheme aims to provide water for irrigation to both Swaziland and South Africa. Construction of the first reservoir in the project – the Driekoppies dam on the tributary river Lomati in South Africa – was finished in 1999, while construction of the US$500M Maguga dam, which lies near Pigg's Peak in Swaziland, was completed in 2002. Of the river Komati’s catchment area of 11,100km2, 900km2 supplies Driekoppies, while a further 6471km2 supplies Maguga.

Komati dams

Maguga’s dam wall is actually shorter than Driekoppies and two other South African dams, Bloemhof and Vaal, but as Tables 1 and 2 demonstrate, it has a larger gross storage capacity because of its depth, resulting in a dam wall height of 115m. In addition, Maguga has a relatively small surface area in relation to its storage capacity, reducing both the impact of evaporation and the land area that had to be flooded. The Swazi government estimates that the Maguga dam will provide irrigation water for 450,000 people and also attract tourism to the area. Farmers’ cooperatives have been set up to negotiate for water, although large sugar cane and forestry concerns are likely to be the project’s main customers. The Maguga scheme is the largest public works project in the country’s history.

A power plant is also to be built at the site for supply to the Swaziland Electricity Board. Tenders for contracts on the 15MW power project were held at the end of 2003, with construction expected to be completed by 2006, while some funding is expected to be supplied by the European Investment Bank (EIB). Although 15MW is modest generating capacity by most standards, it would provide a large boost to Swazi installed capacity, and Swazi politicians have raised the possibility of building a much larger plant on the site. Prime minister Sibusiso Dlamini said: ‘the Maguga dam has the potential of meeting 50% of Swaziland's electricity needs. It is also possible to export power through a new regional 400kV line as far north as the Democratic Republic of Congo.’

The Komati Basin is shared by South Africa, Swaziland and Mozambique. Under the 1992 Komati River Basin Accord, which laid the legal framework for the project and established the Komati Basin Water Authority (KOBWA), up to seven dams could be built, mainly for irrigation use but with a range of possible hydroelectric options open to the project developers. South Africa is entitled to take 60% of the final scheme’s output of water. Maguga Dam Joint Venture (MDJV), owned by Consult4 of South Africa and Swazi Groups consultants, is handling the design and construction supervision of the project. The construction of Driekoppies dam on Lake Matsamo was financed by the Development Bank of Southern Africa, with the Department of Water Affairs acting as the main contractor.

However, as the Komati river also flows through Mozambique before it enters the sea, the government of Mozambique decided to sign up to the agreement in September 2002, as part of its process of economic reintegration in the wider region following its damaging civil war. Maputo’s decision to join was also prompted by the impact of massive flooding in 2000 and 2001, which killed hundreds of people and set the economic recovery back by at least a year. Upstream overgrazing and wetland drainage are both believed to have contributed to the scale of the flooding and the Mozambican government hopes that such practices can be minimised by signing up to the treaty.

Magwagwa Mdluli, the Swazi minister for natural resources believes that organised, coordinated development of the river is the best way of protecting it. He commented: ‘haphazard use of the river, draining it in places for projects at the expense of people downriver who depended on its flow, threatened permanent damage if a regional treaty was not put in place.’

Public opinion

The Lesotho scheme has proved less popular with local people than the Komati development for several reasons. Over 30,000 small scale farmers were forced to move prior to the construction of the first three Lesotho dams, leading to criticism both from within the region and from international human rights organisations. Some critics have claimed that the deal and the project have been drawn up to benefit South Africa and that Lesotho will not benefit as much as it should. As there is no international market price for the supply of bulk water, it is impossible to settle this claim one way or the other. However, Lesotho’s economic reliance upon its much larger neighbour indicates that it is not in a strong bargaining position. Moreover, the terms of the project were agreed between the military autocracy which governed the mountainous kingdom at that time and South Africa’s Apartheid government.

While business interests, politicians and environmentalists have debated the financial and environmental pros and cons of the LHDP, the project unfortunately became the focus of a series of revelations and allegations of corruption. Yet while such revelations have caused a great deal of negative criticism to be heaped upon the project, the way in which the corruption came to light indicates that the local authorities have had some success in identifying financial irregularities and may even increase international support for further large scale dam projects in Africa.

The Lesotho Highlands Water Revenue Fund (LHWRF) was set up to funnel some of the revenues from the project to poorer people in Lesotho, but allegations of corruption prompted the World Bank to reorganise the fund. The case gained international prominence because of the conviction of Masupho Sole, the former chief executive of the Lesotho Highlands Development Authority, for accepting bribes from Canadian engineering company Acres International for the award of contracts on the Katse dam project. In June 2002, Sole received an 18 year sentence, while Acres was fined US$2.3M. Bribery charges are also being pursued against other foreign companies granted contracts on the project.

South African judge Jan Steyn heard the Sole case. Upon rejecting Sole’s appeal, he said that the Lesotho prosecuting authorities had ‘set an example of good governance, and have delivered a blow on behalf of all countries that face major challenges in strengthening their infrastructure through project activity.’ He added: ‘corruption is of growing international and regional concern. Corruption has a particularly devastating impact on development and good governance in developing countries in Africa, because it undermines economic growth, discourages foreign investment and reduces the optimal utilisation of limited resources available for infrastructure, public services and antipoverty programmes.’

Steyn concluded: ‘the question of conviction alone is a far reaching punishment because Acres will be unlikely to secure contracts funded by the World Bank.’ The Bank has provided funding for the LHDP and over the past two years officials have repeated their determination to crack down on corruption in water schemes and other large scale projects in the developing world. A World Bank spokesperson said that this was probably the first time companies paying bribes, as well as individuals accepting them, had been prosecuted on a large international construction project.

Apart from avoiding the type of financial scandal that has affected the LHDP, the Komati dams have received a far more positive reception from local people than the Lesotho scheme because fewer people have been forced to move. A large relocation programme was set up by KOBWA to support the 300 families who lost their homes and land, while graves were relocated with full ceremonial arrangements. In addition, the project was drawn up after the fall of the Apartheid regime and so Swazis generally have no objection to projects which benefit South Africa. As a spokesperson for the Komati Basin Water Authority said: ‘the dam was proposed in the 1990s, not the 1960s, and we are a lot more sophisticated about blocking a river and flooding an ecosystem.’

The two multi-billion dollar projects seem fairly similar in structure but perhaps differ somewhat with regard to approach. The Komati planners appear to have learned from the mistakes of the LHDP in terms of their treatment of displaced people, while there is no doubt that the changed political environment of southern Africa has also played a role in generating differing perceptions of the two projects. However, it would be wrong to cite the Sole case as an example of Lesotho’s failings. Rather, the various trials could lead to renewed support by the multilaterals for large scale development projects, given the commitment to ensure that contracts are awarded fairly.


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Table 1

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