MASERU – The European Investment Bank (EIB) signed a M1.3 billion (€82millin) loan agreement with the government of Lesotho to finance of Phase Two of the Lesotho Lowlands Water Development Project (LLWDP) yesterday. The project co-funded by the World Bank is expected to begin in June this year and aims to increase reliable supply of bulk potable water and sanitation services.
It is expected to benefit four priority areas in the lowlands – Mafeteng, Mohale’s Hoek and some parts of Leribe. “This is important because we are signing to pay for the costs of construction of water supply in these areas and it is important because the two districts of Mafeteng and Mohale’s Hoek have been struggling with water supply for a long time,” the minister of finance Dr Moeketsi Majoro said at the signing ceremony.
“Now with this signature we are signaling implementation of an intervention by the government of Lesotho to provide water in these areas,” he added. Majoro signed the loan agreement on behalf of the government and Diederick Zambon, Chief Executive Officer of the European Investment Bank on behalf of the bank.
Of the overall financing package of EUR 82 million, 41 million is a direct loan while another 41 million is a grant from the European Development Fund. This package accounts for more than 60 percent of the total project cost, which also includes a 67 million World Bank loan.
The EIB loan will mature in 30 years. The lowlands water development project will enable Water and Sewage Company (WASCO) to more than double the annual water sales of 40 million cubic meters in 2017 to 30 million cubic meters as from 2024, according to Zambon. The project is expected to have a positive impact on as many as 300,000 direct beneficiaries, some 15 percent of the country’s population. Majoro indicated that the signing will go a long way towards ensuring that the country makes progress towards meeting the development millennium goals, ‘the availability and sustainable management of water and sanitation for all’.
The project will fully be operated by the government of Lesotho under the direct supervision of the Ministry of Water, with technical assistance procured from elsewhere as need arises. Thousands of job opportunities are expected from the project with the minister of water Samonyane Ntsekele revealing on the same occasion that his ministry is highly prepared to run the project as it was the case with the construction of Metolong dam which run as Phase One of the same project.
The construction of the 83-meter-high Metolong dam began in 2013 and was competed in 2015. The dam now provides treated bulk water to communities in five areas including the capital of Maseru and surrounding towns of Teya-teyaneng, Morija, Mazenod as well as Roma with a reservoir capacity of 64 million cubic meters and a raw water pumping station with a 1.2 cubic meters per second capacity.
Metolong dam cost $450 million and was funded by multiple partners including the World Bank, the African Renaissance and International Cooperation Fund of the Republic of South Africa, the European Investment Bank, Millennium Challenge Corporation, and the government of Lesotho among others.
The last loan signature between Lesotho and the European Investment Bank took place in 2010 for the support of construction of Metolong dam. That time the bank covered 50 percent of the dam and water supply programme costs with the investment of M140 million loan. “We have enough experience because Basotho did a great job at the Metolong dam. After the signing, what is left now is the process of implementation which will see the reality of water supply to the identified places,” Ntsekele said.
In practice, the project concerns bulk water infrastructure that includes river intake, water treatment plant, transmission mains, pumping station and distribution networks. It also includes low scale sanitation and hygiene measures as well as activities and awareness building regarding the reduction of water losses. Zambon emphasized that new project will improve reliable water supply as well as sanitation services and strengthen the water authority’s capacity to operate and maintain the infrastructure.
“The project will increase access to basic water infrastructure with a direct positive impact on both life and health conditions of the population. “It will also support private sector development through access to the essential social development infrastructure which will in turn create employment opportunities,” he said. Water is one of Lesotho’s most valuable resources making important contributions to long-term sustainable economic development and growth prospects.
While large quantities of premium water from the country’s highlands are exported to South Africa, and generate revenues for the government’s budget, too many people and businesses, predominantly located in the lowlands, are still struggling when it comes to reliable access to clean water and sanitation facilities.