The New Development Bank (NDB) – an initiative of the Brazil, Russia, India, China and South Africa bloc – and South Africa's State-owned Trans-Caledon Tunnel Authority (TCTA) have signed a R3.2-billion loan agreement for the implementation of Phase 2 of the Lesotho Highlands Water Project (LHWP).

The NDB will provide the project loan to the TCTA under the sovereign guarantee of South Africa. The project will be co-financed by the NDB, the African Development Bank (AfDB) and other financiers.

TCTA will use the funds to build the Polihali dam and reservoir, a 38-km-long water transfer tunnel, roads and bridges, as well telecommunications infrastructure. This will extend electricity and other development infrastructure to Lesotho, while providing additional water resources for South Africa.

By increasing the yield of the Vaal River basin by almost 15% in the long run, the project will support economic growth and foster sustainable livelihoods for the people of Gauteng, a highly urbanised province with 15-million people and that is responsible for 36% of South Africa’s gross domestic product.

Three other provinces – the North-West, Mpumalanga and the Free State provinces – will also benefit directly from the increased water supply resulting from the project.

“Today marks a significant milestone as the NDB and the TCTA sign the loan agreement for the implementation of Phase 2 of the LHWP. This is the first project financed by the NDB outside of Brics countries and it supports South Africa’s commitment to ensure the availability and sustainable management of water, as promoted by Sustainable Development Goal 6. 

"This project exemplifies NDB’s dedication to supporting projects that promote access to clean water, while prioritising sustainable management of water resources,” says NDB VP and COO Vladimir Kazbekov.

TCTA project finance and treasury executive manager Nhlanhla Nkabinde says this is a pivotal partnership between the NDB and the TCTA.

"The Lesotho Highlands Water Project Phase 2 is not merely an infrastructure development; it’s a testament to what can be achieved when nations unite with a vision for a brighter and more sustainable future. The very essence of this project is to breathe life into our economy, and most importantly, ensure that every citizen who is impacted by the Vaal river system, which the project augments, has access to life’s most vital resource," he adds.

The Lesotho Highlands Development Authority earlier this month reported that consultants and contractors on the Polihali dam had marked an early construction milestone – the diversion of the Senqu river by the pre-cofferdam, and the subsequent diversion of the river into and through the diversion tunnels ahead of the construction of the cofferdam upstream of the Polihali dam wall.