When big dams spell disaster: assessing the Lesotho Highlands Water Project

Steve Rothert
Institute for Global Dialogue website
December 1, 1999

The Lesotho Highlands Water Project has its origins in the apartheid era. Lesotho Highlands communities are supporting the project, despite the destruction it has caused to their homes and arable land. South African environmental organisations, however, oppose it for various reasons. Steve Rothert explains why this project challenges traditional perspectives about large dams and development

The Lesotho Highlands Water Project (LHWP) is one of the largest development projects on the continent. It is also one of the most interesting, since it challenges traditional perspectives about large dams and development. Project proponents suggests that it is a shining example of development and regional water management, while opponents have condemned it as ill conceived and poorly implemented.

In total, the project would consist of five large dams, one powerhouse large enough to make Lesotho self-sufficient in electricity, 200 kilometres of tunnels and over 1000 kilometres of roads. There are numerous examples around the world of upstream countries taking advantage of their position by unilaterally utilising river resources. There was conflict, for example, between Mexico and the US over the latter’s near-total de-watering of the Colorado River, or Turkey’s proposed dams that could have stopped the Tigris and Euphrates rivers from flowing into Syria and Iraq for several months.

The LHWP involves a downstream neighbour, South Africa, obtaining the rights to more than 40 per cent of Lesotho’s only natural resource of consequence. This case could signal a new trend in international river basin management, whereby more developed and powerful downstream countries secure or retain the lion’s share of what rivers have to offer. This was exemplified through the examples of Egypt in the Nile River basin, or the US in the Columbia River, which it shared with Canada.

Through persistence – and military action many would argue – South Africa acquired rights to a portion of Lesotho’s ‘white gold’. Anticipating critical water shortages, South Africa had negotiated in vain for 30 years with Lesotho to divert water from Lesotho’s mountains to South Africa’s industrial heartland, the PWV region at the time.

An apartheid project

In 1986, the South African government provided decisive support to the Lesotho military in its successful coup attempt. It justified the intervention by arguing that the previous government had harboured and supported anti-apartheid fighters. Within six months of the coup, Lesotho and South Africa had negotiated and signed a treaty that set in motion the LHWP. Given the significance of the treaty and the complexity of the project, it is difficult to imagine that the two governments – one brand new – could have finalised negotiations in such a short period of time without a level of discussion and agreement prior to the coup. It can be argued that one ulterior motive for supporting the coup was to secure access to Lesotho’s water.

Economic sanctions against apartheid South Africa forced project proponents to devise alternative arrangements to finance the project. The World Bank, which brokered the arrangement, provided legitimacy and critical start-up funding for the scheme. By naming Lesotho as the Bank’s borrower, European banks, government export-credit agencies and engineering firms could take part without appearing to violate international sanctions against the apartheid regime. The Bank’s loans were channelled through Lesotho but were awarded at interest rates reflecting South Africa’s economic status, not that of its poor neighbour.

Impact on Lesotho

The funding came at a time when de-investment in the apartheid regime had drained R15bn out of the country during the preceding two years. Some argue that by orchestrating a mechanism to avoid sanctions, the World Bank helped ease the pain of South Africa’s isolation, thereby prolonging a brutal regime and the suffering it caused. The leaders of the new South Africa who inherited the project found themselves in the ironic position of promoting a project to which they objected before coming to power. Former minister of Water Affairs and Forestry Kader Asmal said he had ‘strongly opposed the sanctions busting’ 1986 water treaty at the time of its conception.

Since the project started in 1989, project authorities have completed the $2.5bn Phase 1A, which includes the 182-meter-high Katse dam, a 48-kilometre tunnel to the 55-meter-high Muela dam, a 72-Megawatt hydropower plant and 120 kilometres of transmission lines. Phase 1B, expected to cost $1.5bn, is now underway and will consist of the 145-meter-high Mohale dam and a 38-kilometre transfer tunnel to the Katse reservoir.

Those who support the project are quick to list the benefits that the project has brought to Lesotho. Project revenues account for nearly a quarter of Lesotho’s GDP and since the transfer of water to South Africa began in January 1998, Lesotho has earned over US$80m in royalties. Project-related construction expenditures contributed to Lesotho’s 13 per cent economic growth in 1997 and the Lesotho Rural Development Fund has accumulated more than US$30m. Three thousand project-related jobs will earn Basotho approximately US$44m a year for several years; and tarred roads have replaced horse trails to a number of isolated Highland communities.

But these benefits came at a price. Approximately 30 000 people have been affected by Phase 1A and 1B; more than 100 households had to be permanently relocated and hundreds of homes were damaged by construction and had to be repaired. More than 2 300 hectares of arable land was lost, affecting 2 600 households; more than 600 households have been affected by the loss of 3 400 hectares of grazing land; and HIV/AIDS and other urban ills were spread through the migrant labour system. In addition, a number of homes were forced to relocate to make way for the roads, and jobs were fewer than Basotho were led to believe – a contributing factor in the 1996 labour unrest that led to the killing of a number of LHWP workers. There are significant environmental implications as well. One problem is that the first two dams have been built without a full understanding of the needs of the river’s ecosystem for water – called ‘in-stream flows’.

Different views

The families that were affected by both the Phase 1A and Phase 1B programme were resettled and compensated. While these changes have improved the situation somewhat, the Transformation Resource Centre (TRC) and the Highlands Church Solidarity and Action Centre (HCSAC) – two non-governmental organisations working with Highlands communities – report that significant problems persist, and that project authorities are slow in responding. In 1999, these two organisations submitted to the LHWA a long list of outstanding compensation claims that certain community members claim have not been addressed, despite being filed more than two years ago in some cases.

One of the greatest concerns to communities and NGOs is the Rural Development Fund, which is intended to compensate communities for lost communal assets such as grazing land through supporting development projects devised by the communities. According to the TRC and HCSAC, project authorities have made it impossible for communities to access the Fund by establishing unrealistic high application standards and providing little assistance in preparing applications. As a result, no community proposed project has received funding. The Fund has been used, however, to support bogus projects proposed by friends of the Rural Development Fund managers.

Despite past and ongoing problems, however, there has not been vocal opposition to the project that has been found in nearly every other dam construction project around the world. It is not clear how much this relative silence has to do with cultural pressure for individuals to be good citizens of the Kingdom of Lesotho, or the fear that troublemakers are even less likely to benefit from the project. There is hope that the project will somehow benefit their communities. But none of the Lesotho non-governmental organisations working on the project opposes the LHWP, and few community members will say that they wish the project never came to the Highlands. Many will complain about how slow or unresponsive LHDA can be, how their lives have been disrupted and livelihoods lost, but many seem willing to accept the project in the hope that they will benefit from it in the long-term.

South African communities, non-governmental organisations and other stakeholders hold much more critical views of this project. Critics have long objected to the illegitimate origins of the entire project, in addition to its social and environmental impacts in the Highlands. Perhaps the strongest criticism, however, is that the second dam, Phase 1B, was built many years too early because the Department of Water Affairs and Forestry ignored the potential of water conservation and demanded management to stretch existing water supplies. According to Rand Water, more than 50 per cent of water in Gauteng is wasted through inefficient uses and leaks. By reducing this loss by only half, current supplies could last at least 12 years longer than the Department of Water Affairs and Forestry assumes. The costs of the premature construction are borne by Gauteng water users, including poor township residents who, along with other customers, saw their water tariffs nearly double to finance the scheme.

Corruption and bribery

In 1997, objections rose to a crescendo when Phase 1B was nearing completion. Residents of the Highlands filed a claim with the independent World Bank Inspection Panel, alleging that the Bank had ignored its own regulations in failing to insist on conservation. But the claim was rejected. In addition, the South African and Lesotho non-governmental organisations met in Maseru with Highlands communities and project authorities to review project implementation. Tensions flared between the groups when it became clear that organisations from Lesotho supported the project, but not those from South Africa and elsewhere. This represents perhaps the most interesting aspect of the project – that communities most directly affected by the project are more supportive than many of the intended beneficiaries of the project. Often, affected communities make the most powerful arguments against projects for big dams by objecting to being involuntarily sacrificed to make way for the dam.

Recently, Lesotho and South African organisations all condemned the massive bribery scandal involving the former director of LHDA and 12 of the construction companies working on the project. Allegations of bribery and corruption are not new in global dam building operations, but what sets this case apart is that the perpetrators have been exposed, and will be brought to justice. According to court papers, the former chief executive officer received more than R12m over a period of 10 years, ending in 1985.

The list of companies who bribed him reads like a ‘who’s who’ in the dam building industry. All players have denied any knowledge at the time when bribes were changing hands, but there is evidence that the World Bank knew about this. In a memo from the World Bank to project authorities, the Bank asked the LHDA not to dismiss the director, threatening that ‘before we consider further legal action under the provisions of the loan agreement, we would request that you reconsider these replacements’. According to Bank regulations, firms involved in illegal practices such as corruption should be barred from other Bank funded projects. But the Bank has indicated that because the firms were not directly involved in aspects of the project supported by the Bank, the bribes do not constitute a violation of its regulations.

The LHWP embodies the same problems of dam construction projects across the world – lack of transparency in planning, serious social and environmental impacts, and, especially in the case of Phase 1B, the questions around whether there is a need for these projects. Thankfully, more people across the world are beginning to oppose these projects.

Steve Rothert works for the Okavango Liaison Group of the International Rivers Network, based in Gaborone, Botswana.

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