The government has entangled itself in a staggering $53 million (about M940 million) debt, raising alarm bells in Parliament over what many are calling a repeat of the Fraser Solar debacle.
The deal, which involves a renewable energy project to be implemented by China-based Beijing Jinyuntong Technology Co. Ltd (JYT), has stirred controversy within the Public Accounts Committee (PAC) this week.
The agreement is structured as a Build-Operate-Transfer (BOT) model, under which JYT will finance, construct, and operate a 40MW solar power plant with an integrated 20MW energy storage system before transferring ownership to the Government after a 15-year operational period.
Despite Lesotho’s need to boost local energy capacity, currently generating only 72 megawatts against a national demand of 200 megawatts, the project has raised significant legal, financial, and environmental concerns. At present, the country relies on imports from South Africa’s Eskom, spending over M600 million annually on electricity.
One of the most contentious revelations during the PAC hearings was that the project is moving forward without an Environmental Impact Assessment (EIA). Such an assessment is legally required to evaluate the environmental consequences of major infrastructure projects.
The absence of an EIA has triggered outrage, particularly since the site selected for construction is the same Ramarothole location where the government is currently finalising Phase II of an existing solar plant, intended to generate 50MW.
PAC members questioned why officials appeared to know so little about a project of this magnitude. Concerns were amplified by the history of environmental issues at Ramarothole, including soil erosion, which previously forced the government to allocate additional funds for mitigation.
Some PAC members warned that this is déjà vu, referencing the Fraser Solar case, which plunged Lesotho into a costly legal battle with a German company. Fraser Solar is suing the government for allegedly breaching a supply agreement for energy-saving equipment, claiming the country owes over M1 billion.
That case is still pending before the Supreme Court of Appeal in Bloemfontein, with the government having hired high-profile South African legal counsel.
In the current deal, JYT’s electricity price is pegged at M2.10 per unit, significantly higher than the current LEC retail price of M1.43 per unit, and with a proposed annual increase of 5%. This price disparity has further alarmed lawmakers and energy experts alike.
During testimony before the PAC, officials revealed that the Government Secretary, Teboho ’Mokela, had issued a savingram on 24 January 2025 to the Principal Secretaries of Energy and Finance. The savingram included Cabinet’s approval of the BOT project and instructed the opening of an escrow account, with a M31.3 million deposit (3% of total project cost) as a performance guarantee under the Power Purchase Agreement (PPA).
The agreement stipulates that all revenues from the sale of electricity during the 15-year operational period will belong to JYT. It also commits the government to provide the construction site free of charge, to waive all customs duties and VAT for imported materials, and to ensure a stable legislative environment without policy shifts that could affect JYT’s interests.
Critically, any disputes that arise under the agreement are to be handled by the International Dispute Resolution Centre in London, further echoing the Fraser Solar scenario and raising questions about Lesotho’s sovereignty in enforcing or challenging international contracts.
PAC Chairperson ‘Machabane Lemphane-Letsie expressed dismay that such a massive commitment seemed to have bypassed standard oversight mechanisms. She told the Ministry officials that if they had reservations, they should disclose who pushed the project forward against their advice.
During the hearings, Khotso Moleleki, Director of Debt at the Ministry of Finance, admitted that some projects are fast-tracked without meeting all regulatory requirements when the government is eager to secure foreign investment. “Chinese companies are willing to fund projects 100%, but the condition is that Chinese companies must implement them,” he explained. He noted that the Ministry often negotiates for local firms to be subcontracted.
Mothobi Letooane, Director of Project Cycle Management in the same ministry, confirmed that non-compliant capital projects have received approval in recent years. “Some decisions are beyond us,” said Moleleki, adding that the Ministry only conducts technical and financial assessments before handing recommendations to Cabinet.
Chief Legal Officer Motale Tšeole stated bluntly that the JYT agreement is binding. “Sometimes we advise against it, but the principals go ahead,” he noted, acknowledging the difficulty of enforcing institutional checks when executive decision-making overrides expert guidance.
Suspended LEC Managing Director Mohlomi Seitlheko further complicated the matter by noting that the JYT project is different from Phases I and II of the Ramarothole Solar Plant, suggesting the risk of infrastructure overlap and planning conflicts.
Adding to the concerns, officials admitted that JYT was the only renewable energy company presented to Lesotho at the Forum on China-Africa Cooperation (FOCAC) in Beijing. This contradicts claims that multiple companies submitted proposals, prompting the PAC to question the transparency of the selection process.
Technocrats at the Lesotho Electricity Company (LEC) have reportedly raised red flags about the deal, citing viability concerns and implications for long-term energy pricing and sustainability.
