Lesotho Signs for $15 Billion of Wind and Hydro Power Projects

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Johannesburg, South Africa)--Currently launching Phase II of the $8.4 million Lesotho Highlands Water Project (LHWP), Lesotho, the mountainous landlocked country in Southern Africa, has now signed for a $15 billion renewable energy project that will be the country's largest-ever foreign investment.

The Johannesburg-based diversified industrial services and engineering project manufacturing company Harrison & White is forming a joint venture with the Lesotho government to develop the Lesotho Highlands Power Project (LHPP).

The joint venture company, Breeze Power, has signed an agreement with a Chinese technology partner, Mingyang Wind Power (Zhongshan, China), through which wind turbine components will be made in factories in South Africa and Lesotho. Construction will start on these factory projects in early 2012.

When completed, LHPP will generate 6,000 megawatts (MW) of wind power and 4,000 MW of pumped-storage hydropower, which in total will be equivalent to almost 25% of South Africa's current electrical power supply. The project will use the Maluti Mountains wind and water resource to generate power. The first phase of the project will be a 150-MW windfarm with construction scheduled to start in 2012. The complete development will be delivered in phases over the next 10 to 15 years.

The power generated will be sold to South Africa, which surrounds Lesotho. Lesotho is connected to the power grid of Eskom, South Africa's state-owned power utility.

The project will be funded through a combination of debt and equity, with the major debt partners including Chinese financial institutions. Lesotho's Natural Resources Minister, Monyane Moleleki, said that the LHPP project comes at a time when the country's traditional income streams have dried up, largely due to the global economic meltdown.

Concurrent with the LHPP announcement, the governments of South Africa and Lesotho have approved the implementation of Phase II of the LHWP project, which will now be submitted to the parliament for ratification.

The joint project between the two countries, originally implemented under the provisions of a treaty signed in 1986, will see an investment of more than $1 billion in the extension of the water system that feeds South Africa, and in particular the industrial heartland of Gauteng province, and an $850 million hydroelectric power project. The total investment in Phase II will reach more than $1.9 billion by 2020.

One of South Africa's major water management companies, the Trans-Caledon Tunnel Authority, has described the LHWP as "an almost miraculous engineering feat," diverting water from the Senqu River system in Lesotho, through dams, canals and pipelines to Gauteng.

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