The Lesotho Highlands Water Project (LHWP) is one of Africa's largest infrastructure projects and comprises five dams, 200 kilometres of tunnels blasted through the Maluti Mountains, and a 72 megawatt hydropower plant. It is also one of the most controversial in recent times, involving not only proven widespread corruption but also murky – and deadly – military engagements between South Africa and Lesotho. LHWP’s primary purpose is to transfer water to South Africa's industrial heartland. To date, two dams and the hydropower component are complete at a cost of approximately USD 3.5 billion. LHWP has been spearheaded by the World Bank, with the EIB lending USD 20 million for Katse Dam/Phase 1A (1993) and USD 99 million for Mohale Dam/Phase 1B (1998). If the entire project is to be completed and Lesotho delivers as much water to South Africa as the original project treaty requires, then consultants to the project believe that the rivers affected by the project could deteriorate to "something akin to wastewater drains."
More than 27,500 people upstream and an estimated 152,000 Lesotho villagers living along the Senqu River below the Katse and Mohale Dams have been adversely affected to varying degrees by the LHWP, according to Thayer Scudder, a sociologist and member of the project's Panel of Experts from 1989-2002. Affected people have not been made true beneficiaries of the project for which they gave up so much, and the World Bank concedes that poverty has actually increased in Lesotho since ground was broken for the first dam.
Although this project has delivered water to South Africa and many affected people have benefited from improved roads and sanitation, it has caused a lot of trouble, in part because too many other programs designed to help affected people restore their lives have failed. Health problems have been especially extreme. A workforce numbering 20,000 people moved into the Highlands in the mid-1980s, bringing AIDS to the isolated communities. Today, Lesotho has one of the highest AIDS rates in Africa.
And on corruption, in 1999 more than 12 multinational firms and consortia were found to have bribed the CEO of the project. After the CEO himself was found guilty, three major European firms were also found guilty and charged - two of them, Acres International and Lahmeyer, have been debarred at the World Bank. The EIB's reaction to the corruption has puzzled many observers. Not only did it conduct an internal audit and find that no misuse of EIB funds had taken place – thus leading it to take no further action – but the EIB subsequently has gone on to lend to the guilty German company Lahmeyer.
LHWP’s troubled existence and the impacts on local people make the EIB's views on the project – where it "considers that the Highland people's quality of life will be enhanced – even if they have to resettle – as a result of much improved infrastructure created by the project, re-training and other social welfare and employment creation measures, as well as compensation, on all of which they have been consulted and to which they are party" – unfortunately read like something from fantasy land.
- On the wrong side of development: Lessons learned from the LHWP published by Transformation Resource Centre, Maseru, 2006
- LHWP no longer features explicitly on the Bankwatch website, but there are various old documents accessible like letters to EIB on the Bankwatch website
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