Lesotho-Botswana Water Transfer Scheme

Overview

The Lesotho-Botswana Water Transfer (L-BWT) Scheme will supply water to Botswana, Lesotho and South Africa from the Makhaleng dam – part of the Lesotho Lowlands Water Supply Scheme – through a water conveyance pipeline of approximately 700 km in length from Lesotho, through South Africa, to Botswana.

Investment request

€2.31 million grant funding for outstanding feasibility studies related to the Dam and conveyancing pipeline.

Funding received to date

  • The World Bank provided US$2 million grant funding in 2015 for a desk-top study of the L-BWT Scheme.
  • The African Water Facility and the NEPAD Infrastructure Project Preparation Facility Special Fund provided a €2,100,000 grant for studies to establish the technical prefeasibility of the entire system (dam and conveyancing pipeline) and the feasibility of the Dam in Lesotho.
  • The Stockholm International Water Institute and CRIDF are supporting prefeasibility institutional and financial studies.
  • Global Water Partnership Southern Africa will support the project’s capacity-building requirements with €170,000 (cash and in-kind).
  • The Orange-Senqu River Commission (ORASECOM) will provide €171,360 (cash and in-kind).
  • The governments of Botswana, Lesotho and South Africa will initially provide €61,740 (cash and in-kind).

Main sponsor(s)

ORASECOM, on behalf of the governments of Botswana, Lesotho, Namibia and South Africa.

Key facts

Water infrastructure type

Bulk water supply, hydropower

Country(ies), location

Botswana, Lesotho and South Africa

Transboundary basin

Orange-Senqu Basin

Development impact

  • Increased climate resilience and long-term security of water supply for communities in Botswana, Lesotho and South Africa, with commensurate socio-economic benefits
  • Electricity generation from hydropower (optional, subject to study outcomes)
  • Revenue generation for Lesotho and increased land under irrigation with commensurate food security in Lesotho

Financing requirement

Capital expenditure

TBC

Project preparation

€2.31 million grant (funding gap)

  • The L-BWT Scheme will address critical water needs in the two largest economies in the region – Botswana is predicted to run out of water by 2025 if new water sources are not found and the proposed water conveyance system will pass through areas in South Africa where there are unmet water needs.
  • The Orange-Senqu Basin is already of major economic importance to South Africa and Lesotho, contributing approximately 26% and 100%, respectively, to each country’s GDP.
  • Major development finance institutions (i.e. the World Bank and the African Development Bank) will ensure that the project is well prepared in all aspects.
Financing need
€ (000)
Environmental and social impact assessment and management plans, resettlement action plan
1,420.00
Technical feasibility of the dam in Lesotho
685.36
Feasibility-level analyses of institutional and financial structure
600.00
Expert review of studies related to the dam, tunnelling and pipeline
200.00
Total
2,305.36

The financial and economic returns on the project will be established during the current prefeasibility phase of the project and will be refined during the feasibility stage.

  • Water will be directed to local water suppliers, with initial studies indicating the main demand likely to be from Botswana, followed by South Africa. Demand estimates will be a key focus of the feasibility studies.
  • The potential for hydropower generation in Lesotho and South Africa will be explored for power supply into the Southern Africa Power Pool system.
  • Water is subsidised to different degrees in all three countries, through various mechanisms, including cross-subsidisation, free basic water provision and less-than-cost recovery. The cost-effectiveness of delivery will be a critical success factor for the project.
  • The feasibility study has focused on the preferred option of building a new dam on the Makhaleng River in Lesotho, and the pipeline.
  • A desk-top study identified route options for the conveyance system.
  • A prefeasibility study, currently underway, will examine the preferred option to be recommended for the full feasibility study.
  • Institutional options will be explored during the current prefeasibility phase of the project and will be refined during the feasibility stage.
  • The sponsoring governments have experience in establishing special purpose vehicles for similarly large infrastructure projects.
  • The project is classified as high impact (African Development Bank safeguards system level 1, World Bank environmental and social risk classification ‘high risk’), requiring a full social and environmental impact assessment, including under the laws of the sponsoring countries.
  • The Lesotho and South African governments’ environmental and social safeguard systems have been tested through the Lesotho Highlands Water Project, which involved the construction of dams, a hydropower station and associated infrastructure, operations and maintenance, and the requisite relocation and settlement programmes.