Vaal River System Water Resources Development Project
In June 2021, the DBSA and the TCTA concluded two loan facility agreements spanning 20 years for implementing Phase II of the Lesotho Highlands Water Project (LHWP), which forms part of South Africa’s Vaal River System (VRS).
The Trans-Caledon Tunnel Authority (TCTA) is a state-owned entity and an international water infrastructure agent. In June 2021, the DBSA and the TCTA concluded two loan facility agreements spanning 20 years for implementing Phase II of the Lesotho Highlands Water Project (LHWP), which forms part of South Africa’s Vaal River System (VRS). This funding is allocated to sustaining water security in South Africa.
This transaction strengthens ongoing cooperation between the two parties and furthers their mutual water infrastructure mandates. It will significantly increase the DBSA’s loan book exposure to water and sanitation while diversifying the total loan book, one of the Bank’s key risk management objectives. This deal will enable TCTA to fulfil its flagship role as a South African bulk water infrastructure agency by implementing South Africa’s 1986 water treaty with the Kingdom of Lesotho.
Over the next five years the project’s second phase is aimed at achieving:
- The construction of the Polihali Dam in Mokhotlong district, a 165-metre-high concrete faced rock fill dam with capacity to hold 2.2 billion cubic metres of water; and
- The construction of a 38km water transfer tunnel connecting the new Polihali Dam to the existing Katse Dam, which is part of Phase I of the LHWP.
Economic impact:
- Combined GDP impact of approximately R245 billion across the two countries.
- An additional water supply available to approximately 60% of the South African economy.
- Incremental royalty income to the Kingdom of Lesotho.
Social impact:
- Availing additional water to approximately 45% of the South African population.
- Supporting Lesotho’s GDP per capita and presenting the possibility of further renewable energy generation.
Job creation:
- An estimated 545 000 job opportunities will be created, both directly and indirectly during the construction phase through to the operational phase.
Regional integration:
- Strengthening cooperation between South Africa and Lesotho by expanding this flagship, historic and highly strategic bi-national project.
of approximately R245 billion across the two countries
to approximately 45% of the South African population
per capita and presenting the possibility of further renewable energy generation
will be created, both directly and indirectly during the construction phase through to the operational phase