Lesotho: Lesotho Transportation Profile

The Lesotho government pursued efforts to resolve infrastructure impediments, particularly in utilities. Lesotho experienced acute power shortages in 2008 due to a regional supply deficiency. Power generating infrastructure is ageing, there has been inadequate investment in new power stations and request in South Africa is increasing.

Lesotho’s own ‘Muela hydropower station, built as part of the Lesotho Highland Water project in the late 1990s, does not meet domestic request especially during the peak winter months of June and July. Plans are underway to increase the capacity of the station during the construction of the Polihali Dam as part of the Highlands project. Construction of the dam is expected to commence in 2011 for a cost of LSL 7.3 billion (USD 950 million), and will be used to increase water supply to South Africa and increase hydropower generation capacity. A feasibility study on the power generation expansion is being carried out.

A USD 4.3 million contract was signed in June 2009 for the design and supervision of the construction of Metolong dam. The dam is to supply water for domestic and industrial purposes in the lowlands of Lesotho including the capital, Maseru, which experiences periodic water shortages due to increased request. The project costs a total of USD 280 million and is financed by a consortium of donors. The government built new access roads in major urban centers and bridges aimed at linking the mountainous Qach’a Nek with Semonkong, cutting the driving distance to the significant South African port of Durban.

The proximity to South Africa should be an opportunity for Lesotho to boost its economy and narrow the income gap with its neighbour. With appropriate structural and institutional reform, Lesotho could attract investment from South Africa given its low wage rate and relatively cheaper utilities. Banking reforms and efforts to promote the private sector could bear fruit if implemented properly.