Tunis, 4 February 2009 - Efforts by the Lesotho government to improve electricity supply in the country received support from the Board of Directors of the African Development Bank (AfDB) Group which, on Wednesday in Tunis, approved a combined loan and a grant of 11 million Units of Account (UA*), equivalent to US$ 16.4 million, to finance the country’s Electricity Supply Project.
The UA 8.9 million loan and UA 2.1 million grant will support investment in electricity supply infrastructure to enhance electricity access rate and ensure improved efficiency, reduce shortages and assist the country to reduce poverty and achieve the Millennium Development Goals (MDGs).
The project is consistent with the implementation framework of the African Development Fund (ADF-11), which focuses on investment in infrastructure, governance and regional integration, vital for the development of markets to support growth. On completion, it is expected to improve living conditions for the population and contribute to poverty reduction and economic growth by providing expanded, sustainable electric power at affordable cost, using renewable energy resources.
Under the project, electricity production shortages will be alleviated by exploiting renewable energy sources such as mini hydropower and energy conservation and demand management. The project envisages restoration of a 2 MW mini-hydro plant to make up for production shortages by 17 MW which is quite significant for Lesotho. The low electricity access rate will be addressed through the expansion of the transformation and distribution system in Maseru, Hlotse, Mphaki and Mantšonyane, in keeping with the country’s 2007 Rural Electrification Master Plan as well as its 2020 Vision.
The project is in line with the areas of focus and strategic intervention pillars of the Poverty Reduction and Growth Strategy (PRGS) and Country Strategy Paper (CSP) for Lesotho (2008-12), which are, in turn, derived from the Vision 2020. Improved energy infrastructure will bolster private sector-led economic growth envisaged for the mining, manufacturing, textile and tourism sectors.
The project also conforms worth the Bank’s Clean Energy Investment Framework (CEIF) approved by the Board in March 2008, which focuses on promoting clean energy development and contributing to global emissions reduction efforts, by steadily raising energy efficiency on the supply side and encouraging a culture of energy saving on the demand side, increasing the contribution of renewable energy sources, and paying close attention to environmental and social externalities of energy production.
The total project cost is estimated at UA 15.18 million. The ADF loan accounts for 72.48 % of the costs.
The remaining 27.52 % will be financed by the government and the Lesotho Electricity Corporation (LEC).
*1 UA = US$ 1.49192 as at 04/02/2009