The New Development Bank (NDB), which was established by the BRICS bloc, and the Trans-Caledon Tunnel Authority (TCTA) have inked a loan agreement for the implementation of phase II of the Lesotho Highlands Water Project (LHWP). The NDB will provide a project loan of 3.2 billion South African Rand (USD 173 million) to TCTA under the sovereign guarantee of South Africa.

Lesotho is a small landlocked country bordered on all sides by South African provinces. The LHWP is a multi-phased project to provide water to the Gauteng region of South Africa and to generate hydroelectricity for Lesotho. The Loan Agreement was signed by Vladimir Kazbekov, Vice President and Chief Operating Officer of NDB and Percy Sechemane, Chief Executive Officer of TCTA, on the sidelines of the 15th BRICS Summit currently taking place in Johannesburg.

TCTA, a state-owned entity in South Africa charged with financing and implementing bulk raw water infrastructure projects, will use the funds to construct the Polihali Dam and reservoir, a 38-kilometre-long water transfer tunnel, roads and bridges, telecommunications infrastructure, and will extend electricity and other development infrastructure to Lesotho, it said in a statement. The project will also bring relief to South Africa’s economic hub of Gauteng province, which has been plagued by water supply issues for several years now.

yield of the Vaal River Basin by almost 15 per cent in the long run, the project will support economic growth and foster sustainable livelihoods of people of Gauteng, a highly urbanised province with 15 million people (25 per cent of the total population of the country), responsible for 36 per cent of South Africa’s GDP, the statement said. Three other provinces (the North-West, Mpumalanga and Free State provinces) will also benefit directly from the increased water supply resulting from the project.

The Project will be co-financed by NDB, the African Development Bank (AfDB) and other financiers. Today marks a significant milestone as NDB and TCTA sign the Loan Agreement for the implementation of Phase II of the Lesotho Highlands Water Project.

This is the first project financed by 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 (of the UN). This project exemplifies NDB’s dedication to supporting projects that promote access to clean water while prioritising sustainable management of water resources, Kazbekov said. This pivotal partnership between the NDB and TCTA represents more than just the provision of water it is an emblem of our shared commitment to sustainable progress and the empowerment of our communities, said Nhlanhla Nkabinde, TCTA Executive Manager for Project Finance and Treasury.

The Lesotho Highlands Water Project Phase II 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 added.

The NDB was established by Brazil, Russia, India, China and South Africa to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. In 2021, NDB initiated membership expansion and admitted Bangladesh, Egypt, United Arab Emirates and Uruguay as its new member countries.

Trans-Caledon Tunnel Authority (TCTA) is an international water management institution established by legislation related to water.