The Kingdom of Lesotho received financing to the tune of M86 million from the World Bank for the construction of 60KM, 33kV Line transmission from Hlotse to Ha Belo and 2 x 10MVA Substation.
Lesotho Electricity Company (LEC) failed to deliver a multimillion maloti project at Ha Belo industrial complex. Having spent M127 million (M41 million over budget) Lesotho Electricity Company (LEC) failed to deliver this project, Lesotho Tribune can reveal.
The construction of the 16 factory shells at Ha Belo industrial complex commenced in January 2018, with Unik Construction Engineering awarded contract of the M1 billion project.
The project is now delayed by over three years today, due to unavailability of electricity, yet M127 million has been spent, but there’s nothing on the ground.
This multimillion contract was awarded to a joint venture between the TM2, Hogs and American Power One, which withdrew from the joint venture between 2022/23 financial year.
According to project documents seen by Lesotho Tribune, the project was marred by glaring irregularities by the Lesotho Renewable Energy and Energy Access Project (LREEAP), Lesotho Electricity Company and Ministry of Natural Resources (now Ministry of Energy).
According to sources with intimate knowledge of the project, the problems started in December 2022, when LEC and LREEAP was forced to pay unsubstantiated claims by the contractor. The pressure, according to our sources came from the then Principal Secretary and deputy principal secretary at the ministry of natural resources.
Our sources went further to highlight that principal secretary at ministry of natural resources, wanted to violate the subsidiary agreement, which was signed by the World Bank, Ministry of Finance, Ministry of Energy and LEC. The subsidiary agreement governed how the project will be managed and the roles of different stakeholders with LEC/LREEAP taking the central role in the delivery of the project.
The PS at Ministry of Energy is accused of unduly pressuring LREEAP to make payments to the contractor yet LREEAP was not happy with progress onsite.
“She (PS) used to write to LREEAP demanding that they be paid,” our source said.
Our source continued that LREEAP managed to stand its ground by refusing to make any payments until Basotho Action Party (BAP) joined government.
“When BAP joined, everything went south! PS Phapano killed the project unit at LEC and took all the functions to ministry of energy. The payments were now being made without the approval and oversight of LREEAP,” our source added.
“Phapano paid millions to the contractor without the authority, using World Bank’s fund without authorization. LREEAP made him aware of the subsidiary agreement and he said that agreement was illegal, him, as the PS has the power manage and administrate the project,” our source concluded
Lesotho Tribune reached out to PS Tankiso Phapano, but no response was received until publication of this article.
Lesotho Tribune (LT) caught up with Professor Nqosa Mahao (NM) Minister of Energy and leader of BAP, to give him an opportunity to respond to the allegations.
LT: Can you tell us which company was awarded the contract to construct the 60KM, 33kV transmission line from Hlotse to Ha Belo and the 2x10MVA substation?
NM: The project was initially awarded to a joint venture between TM2, Hogs and American Power One. However, American Power One withdrew from the venture between 2022 and 2023.
LT: What was the cost of this project?
NM: The original allocation was M86 million under a lump-sum contract. However, as of today, M127 million has been spent, and unfortunately, there are no funds left to continue the project.
LT: After almost three years, why is the project still not complete?
NM: The project has faced numerous delays due to stoppages, increased costs, and overspending of the allocated funds.
LT: We’ve heard that some LREEAP functions have been moved from LEC to your ministry. Can you confirm this? And if so, why did it happen?
NM: The matter is currently under investigation, and the World Bank is also looking into it. While I can’t confirm for sure, there are claims that LREEAP functions, which should have been managed by LEC, have been shifted to the Ministry. If this is true, it would be a violation of the subsidiary agreement.
LT: Our sources indicate that the service provider has been paid, but there’s still no substation at Ha Belo. How did this happen, and what is being done to address it?
NM: Yes, that’s correct—there is no completed substation at Ha Belo. I inspected the site three weeks ago, and the substation is still incomplete. Additionally, the line between Hlotse and the substation has yet to be strung.
LT: How much has been paid to the service provider so far for the substation contract?
NM: To date, M127 million has been spent, which includes some overspending beyond the initial budget.
Lesotho Tribune reached to LEC , but no response was received at the time of publication of this article.
Lesotho Tribune confirmed with a source at World Bank that the bank has begun its investigations and will jet in next week as part of investigations, “the bank is likely to pause and/or withhold current and future projects it is funding in Lesotho, due to this scandal,” our source said.
The delay of the over 3 years to bring electricity to Ha Belo has negatively impacted on the investment drive spearheaded by LNDC, this is according to sources at LNDC who are mandated to bring investment and much needed jobs into the country.
In an effort to understand how this delay has affected investment drive, Lesotho Tribune caught up with minister of Trade and Industry, Mokhethi Shelile and he had this to say;
He said the electrification project experienced delays for various reasons, including the refusal of landowners to continue with the infrastructure work without compensation. However, the World Bank eventually provided the necessary compensation. There were also other issues, such as force majeure (acts of God), which were beyond control, like changes in weather, as well as technical problems.
Additionally, the cost of construction exceeded the allocated budget of M86 million due to overspending. “Indeed, overspending occurred,” he reiterated.
The project was initially planned to take 18 months, but due to stoppages, such as the unavailability of necessary materials (e.g. cable from China), delays continue. He emphasized that he does not know when these materials will arrive in the country.
He mentioned that, to date, only poles have been erected, and the contractors are still waiting for the remaining materials. “Despite some progress, such as the completion of substantiation platforms and the preparation of a 51,000 square-meter area, the project remains incomplete,” he added.
When asked whether there is a pipeline of investors at Ha Belo industrial estate, Minister Shelile stated that the investors involved are not to be disclosed, as the project is not yet fully established.
He explained that various countries are looking to invest, and disclosing their names might cause issues, as some politicians may attempt to dissuade them from investing due to personal rivalries. “Bo Machesetsa,” he said, referencing the potential political interference.
Minister Shelile acknowledged concerns that his ministry had failed to create jobs at Ha Belo due to the electrification project’s incompletion, expressing that it could also damage Lesotho’s reputation. Promises of completion have been made repeatedly, but nothing concrete has materialized yet.
Comments from TM2 and Hog were unavailable at the time of going to press and this article will be updated to include their comments once available.
