Lesotho: Exposed - Massive Solar Rip-Off

13 November 2020

IN a major scandal that is set to plunge the country into years of unnecessary debt, the previous Thomas Thabane administration is said to have agreed to a grossly inflated M2, 8 billion deal with a Chinese contractor for the construction of a 70-megawatt (MW) solar power generation project at Ramarothole, Mafeteng.

The project has now been inherited by the current Moeketsi Majoro-led government after the collapse of the Thabane administration in May this year.

Despite its inflated cost, the project is set to begin anytime from now. Development Planning Minister, Selibe Mochoboroane, yesterday told the Lesotho Times that Chinese engineers are expected in the country today to begin work on the project.

Well-placed sources in the solar power generation industry this week told this publication that it costs US$1 million (about M16, 29 million) for the infrastructure to produce 1MW of solar power yet the government had agreed to an inflated cost of US$2,5 million per 1MW. This means instead of paying US$70 million (about M1, 1 billion) for the Ramarothole project to produce 70 MW of electricity, the government will in the end pay US$175 million (about M2,8 billion), a humungous rip off of poor Basotho.

According to 'Mathabo Mahahabisa, the chief accounting officer of the newly formed Lesotho Electricity Generation Company (LEGCO), which is overseeing the project, the government will pay US$70 million for phase 1 of the project which is expected to produce only 30 MW of electricity. She said the costs of the second phase of the project, which will generate an additional 40 MW, will be determined "taking into consideration current trends in solar generation environments".

However, the well-placed sources said the government had already agreed to pay M2, 8 billion for the whole project. They said the government will be forced to pay through the teeth and leave behind a huge legacy debt for future generations all because the contractor, Sinoma Tbea Consortium, allegedly made underhand payments to then Energy and Meteorology Minister, Mokoto Hloaele, who facilitated the deal. Former First Lady 'Maesaiah Thabane is also said to have been part of the underhand action, owing to her connections to one David Chen, who was fronting the project as well as former Lesotho Electricity Company (LEC) chairman, Refiloe Matekane.

Mr Hloaele served as energy minister in the previous government from 2017 until February 2019 when then Prime Minister Thomas Thabane reshuffled him to the Home Affairs ministry. He denies receiving any bribes to facilitate the bloated deal.

Ms Thabane was not reachable on her mobile phone for comment yesterday.

Despite the massive cost implications, the project is going ahead. The sources said the US$70 million had already been approved by the China EXIM Bank to finance Phase I of the project which will produce only 30 MW of power daily. But considering that it costs US$1 million to produce 1 MW of power, this money would have been enough to construct the entire facility.

Energy and Meteorology principal secretary, Themba Sopeng, told this publication that "it is true that there is such a project and government has established the LEGCO to oversee the project".

"The LEGCO's chief accounting officer is 'Mathabo Mahahabisa. She is best placed to discuss the matter with you," Mr Sopeng said.

On her part, Ms Mahahabisa said the government had formed the LEGCO to oversee electricity generation in the country.

"The Lesotho Electricity Company (LEC) is a utility company with the exclusive mandate of providing electricity transmission services to all customers that are prepared to pay for grid connection to electricity. But the newly formed LEGCO has been created to oversee electricity generation in the country including the 70 MW Ramarothole Solar Generation Project which will be implemented in two phases," Ms Mahahabisa said.

She said Phase I of the project, to be completed in 2023, is for the construction of a solar plant which will generate 30MW of electricity.

"Other outputs of phase 1 will be a 132 kilovolt (KV) sub-station and a 55km transmission line. Phase I will cost US$70million. Phase II will be for 40MW power generation and its costs will be determined taking into consideration current trends in solar generation environments.

"The project is financed by China EXIM Bank. It is one of the infrastructure projects being implemented under the Forum for China-Africa Cooperation (FOCAC) which include the construction of the Mpiti-Sehlabathebe Road, the Maseru Hospital and Eye Clinic (to replace Queen Elizabeth II Hospital) and the Hlotse multi-purpose dam.

"Implementation of Phase 1 of the (solar) project has been disrupted due to Covid-19 but the completion date for Phase I is still 2023," Ms Mahahabisa said.

She said the government decided on the project as part of its long-term goals to ensure self-sufficiency in electricity generation. She said Lesotho requires about 165 MW of electricity per day. Currently the country only produces 72MW at its Muela Hydropower Station with the remainder imported from Mozambique and South Africa.

"The country is unable to meet local electricity demand and has to import the remainder from Mozambique and South Africa. If the country is to secure its own electricity needs, then it has to improve generation within the country," Ms Mahahabisa said.

On how the government settled on the Chinese-owned Sinoma Tbea Consortium as the contractor, she said the firm had been selected by China EXIM Bank.

"I am not privy to processes that were followed when appointing Sinoma Tbea Consortium as the processes of appointing contractors was done in China by the lender (China EXIM Bank). The contractor was selected by the lender in accordance with the provisions of the financing agreement that the contractor shall be a Chinese company and materials shall be sourced from China," she said.

Her positive view of the Ha-Ramarothole Solar Power Station is not shared by Minister Mochoboroane. Last month Mr Mochoboroane told the Sunday Express that the solar project was one of the projects which were "ill-conceived and politically motivated", hence the delays in implementing them.

"The Maseru Hospital and Eye Clinic and Ramarothole solar projects have been included in the last three financial budgets. But I have realised that some of these projects were politically motivated hence they are taking longer to be implemented because of their top-down approach.

"Funding was sourced prematurely without following the proper procedures. These two are some of the many overdue projects but I hope they will soon be implemented," Mr Mochoboroane said.

Yesterday, Mr Mochoboroane said he was not aware of the bribery allegations levelled against former Minister Hloaele and others.

He said he will however, "check" to establish if there is any truth to the allegations and that the project cost had been grossly inflated.

But authoritative government sources alleged that Sinoma Tbea Consortium greased Mr Hloaele and Ms Thabane to ensure it was selected. They said the value of the project was grossly inflated because the consortium had enlisted the support of the powerful individuals, including Mr Matekane.

The sources said Mr Hloaele went so far as insisting on Sinoma Tbea Consortium against the advice of former Chinese Ambassador to Lesotho, Sun Xinghua, who warned that the project was too expensive.

"The Chinese embassy and former ambassador Sun Xinghua advised the government of Lesotho against this deal. He said it was too expensive for the country and that Lesotho would struggle to repay the loan plus interest but Ntate Hloaele went ahead with the deal," a source said.

Another source concurred, saying, Mr Hloaele went ahead and facilitated the deal "because of his questionable relationship with Sinoma Tbea Consortium".

"As we speak, Lesotho has signed a loan agreement with China EXIM Bank which went ahead with the recommendation to appoint Sinoma as the contractor.

"Sinoma bribed Ntate Hloaele to make this deal happen. The price was inflated to accommodate bribes for Hloaele and his people.

"It was agreed that Ntate Hloaele and his people will be handsomely rewarded for facilitating the deal. Their kickback is M400 million in total.

"Government now has a M2, 8 billion loan plus interest because of a decision by Hloaele to sign the deal despite serious misgivings by the Chinese embassy," the source said.

The Chinese Embassy's Economic Officer, Wang Haosiang, this week directed all the questions on the solar project to his colleague, Hu Jing, saying she was the one "directly dealing with this project".

By yesterday, Ms Hu had not called back with her comment as she had promised.

Meanwhile, Mr Hloaele hotly denies the bribery allegations.

He spat venom and threatened to report this reporter to her bosses for sending him questions via WhatsApp. The questions were only sent to him after he refused to take a call saying it had come later than the initially agreed time.

"What you have written to me is rubbish. I can even report you to your boss if this is the way you approach me. I am very particular about how I am approached. I wanted us to have time together so that I can give you an insight of this project. For your information, I am the one who has information about this project.

"But you have annoyed me with these things which you have written to me. Why are you writing to me? Let's not waste time, what do you want us to do. It is not true. I did not sign for the project in exchange for bribes. What you have written to me is rubbish," Mr Hloaele said.

But authoritative government sources insist that Mr Hloaele gratuitously promoted and facilitated the M2, 8 billion solar energy deal in exchange for payments from the Sinoma Tbea Consortium. Roped into the deal was the former first lady, who was known to wield enormous power in the previous government, and was accused of essentially running its operations. She is also said to have been in cahoots with Mr Chen, who fronts the project.

Sources said the current government should have taken a leaf from former Energy and Meteorological Services Minister, Professor Ntoi Rapapa's decision to terminate a similarly inflated deal that had been granted to another Chinese entity, China Railway International Group, for the erection of power lines to provide electricity from Mazenod to Qacha's Nek.

The government had apparently been overcharged when it was asked to fork out US$ 126 million (about M2 billion) for the project that Prof Rapapa said could have been delivered for US$79-million (about M1, 2 billion).

That project had been similarly inspired by Mr Hloaele and former Lesotho Electricity Company (LEC) chairperson, Refiloe Matekane.

Upon being shuffled to the Energy and Meteorology Ministry, Prof Rapapa canned the deal after concluding that it had been rigged and inflated and would burden Basotho taxpayers for generations to come.

At the time, Mr Matekane defended the deal, saying the US$ 126 million figure was arrived at after a "thorough" feasibility study conducted by China Railway.

He also accused Prof Rapapa of scuttling the deal to bring in his preferred bidder, another Chinese firm, Grissag AG, which allegedly had links with Prof Rapapa's Alliance of Democrats (AD) party. But sources said Mr Matekane was only fighting to preserve "his own slice of the action". Mr Rapapa was right to cancel the patently corrupt and inflated deal, they said.

Authoritative sources said these costly deals, facilitated by politicians and influential people for their own aggrandizement, would have far reaching negative repercussions on Lesotho and future generations. The country, with a measly budget of less than M30 billion annually, cannot simply afford these unaffordable corrupt deals.

"These deals that are awarded without any transparency are costly and will keep the country's finances in limbo... Remember again the Nikuv scum," said an authoritative source in reference to a previous coalition government's decision to award Nikuv, an Israeli company, a huge tender for printing passports and ID cards without a competitive bidding process.

It later emerged that the deal's Basotho facilitators had been bribed and former Home Affairs principal secretary, Retšelisitsoe Khetsi, was arraigned for allegedly receiving a M5 million bribe.

But as with all such cases of high graft in Lesotho, it fell by the wayside owing to the paralysis of the criminal justice system. Basotho have however forked hundreds of millions of maloti for a project that could have been implemented at much lower costs by other reputable bidders who were severely shortchanged when the bidding process was abruptly cancelled and the deal awarded to Nikuv.

"The DCEO must spring to action and look at all these deals. It pains to see the country being destroyed by these hugely inflated projects which are facilitated by a corrupt few who have no qualms about mortgaging the future of this country for their own immediate gains," said one source.

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