LESOTHO is facing the loss of revenue from water and power sales to South Africa and may see its share of an undersea communications cable seized after it breached the terms of a contract with Frazer Solar GmbH.
Under a global enforcement order, following the award of 50 million euros ($61 million) in damages in an arbitration case in South Africa, Frazer said in a statement Tuesday that it has taken legal action to seize royalties that would be paid to Lesotho’s government by the Trans-Caledon Tunnel Authority SOC as well as payments for power from Eskom Holdings SOC Ltd.
It has also had Lesotho’s share in the Mauritius-based West Indian Ocean Cable Company provisionally seized.
Frazer began legal action against the southern African nation in 2019 after what it said were a series of contractual breaches. The company signed an agreement in 2018 with Lesotho to provide as many as 40,000 solar water-heating systems, 20 megawatts of solar photovoltaic capacity, 1 million LED lights and 350,000 solar lanterns, it said.
‘The government of Lesotho has been formally notified of these legal proceedings on 25 separate occasions over a period of 25 months since 2019,’ Frazer said in the statement.
While the German government agreed to finance the programme, Lesotho’s Finance Ministry failed to execute the project’s financial arrangement and the government hasn’t engaged with the legal process, Frazer has said.
Lesotho’s finance and energy ministries didn’t sign the contract because it hadn’t been approved by Cabinet and wasn’t a government initiative, Buta Mosemane, press secretary in Lesotho Prime Minister Moeketsi Majoro’s office, said in an interview on Radio Lesotho. A person, who he didn’t identify, signed on behalf of the government without being authorised to do so, he said.
While the government on May 19 said it had no knowledge of the case, Mosemane conceded in the interview on Wednesday that court documents were received in June last year, but said government officials took no action. The programme was supposed to be paid for with a $100 million ‘soft’ loan from Germany, he said.
Lesotho, a mountainous enclave within South Africa, earns much of its foreign exchange by selling water and power to its bigger neighbour from the Lesotho Highlands Water Project. Water royalties amount to $70 million a year, Frazer said.
Eskom and Trans-Caledon said they weren’t immediately able to comment. An email to West Indian Ocean Cable wasn’t immediately responded to.