China Eximbank provides RMB 481.5 million government concessional loan for Phase 1 of Ramarothole 70MW Solar Generation Project

In 2020, China Eximbank and the Government of Lesotho signed an RMB 481.5 million ($69,818,683.80) government concessional loan (GCL) agreement for Phase 1 of the Ramarothole 70MW Solar Generation Project. The estimated borrowing terms of the loan are as follows: a 20-year maturity, a 5-year grace period, a 2% interest rate, a 1% management fee, and a 0.5% commitment fee. However, it is known that the borrower was to use the loan proceeds to finance a commercial contract between the Government of Lesotho and a consortium consisting of Sinoma International Engineering Co., Ltd. and TBEA Xinjiang New Energy. The purpose of the project is to construct a 30MW photovoltaic solar power plant — in the locality of Ha-Ramarothole within the district of Mafeteng — on a 220-hectare plot of land. It also involves the upgrading of the Ramarothole Sub-Station and installation of the high-voltage transmission line back to Masianokeng Sub-Station from where power will be distributed nationwide. Sinoma International Engineering Co., Ltd. and TBEA Xinjiang New Energy are the contractors responsible for implementation. A formal groundbreaking (sod-turning) ceremony took place on December 16, 2020. However, the ceremony was almost aborted at the 11th hour as angry villagers demanded a stop to the project until they had been compensated for the loss of their land which will be the site of the project. The ceremony only went ahead after a senior representative from the Government of Lesotho (Mohapi Mohapinyane, the Minister of Energy and Meteorology) met with Principal Chief Seeiso and promised to compensate the villagers in the next two weeks. This project has also been plagued by controversy and accusations of corruption and artificially inflated pricing. The Directorate on Corruption and Economic Offences (DCEO) launched an investigation to establish how the tender was awarded by the Government of Lesotho to Sinoma International Engineering Co., Ltd. and TBEA Xinjiang New Energy. In a December 3030 interview with the Lesotho Times, Finance Minister Thabo Sophonea said that the government was forging ahead with the project because there were just allegations and no compelling evidence of any irregularities in the awarding of the tender. More specifically, he said “On our side we do not have any solid evidence of anything untoward, there are just allegations. […] There is nothing concrete. The DCEO and other departments have not written to us to indicate that there is a corruption behind this project. Yes, the allegations are there but you cannot stop acting unless you have a direct order or evidence stopping you. […] It is their (DCEO) duty to investigate but then again we have to continue with the development of the country until the DCEO has something tangible to act on. It is their duty to investigate whatever they think has not been properly done but unless something solid can be brought to us, we cannot stop. We are happy they are continuing with the investigations but now we have to go ahead because we are already late in starting this project.” The DCEO began probing the deal in the wake of an exposé by the Lesotho Times of a massive scandal in which some senior officials in the Thabane administration, including former Energy Minister Mokoto Hloaele, reportedly agreed to the bloated deal with Sinoma International Engineering Co., Ltd. and TBEA Xinjiang New Energy in exchange for bribes. Former Energy Minister Mokoto Hloaele is alleged to have received a sizeable bribe along with former First Lady Maesaiah Thabane and others to facilitate the deal. Hloaele has since denied receiving any bribes. He has instead challenged current Development Planning Minister Selibe Mochoboroane to explain how the Government of Lesotho agreed to the deal, saying it was Mochoboroane and not him who signed a cooperation agreement for the project with Sinoma International Engineering Co., Ltd. and TBEA Xinjiang New Energy.

Additional details

1. This project is also known as the 30MW Mafeiteng Photovoltaic Power Plant Phase I Project, Phase 1 of the Mafeteng Photovoltaic Power Plant Project, and the Ramarothole Solar Power Project. The Chinese project title is 莱索托马费腾光伏电站一期30MW项目. 2. Attendees of the groundbreaking (sod-turning) ceremony included Government of Lesotho Ministers Mohapi Mohapinyane (Energy and Meteorology), Thabo Sophonea (Finance), Professor Nqosa Mahao (Law and Justice), Nkaku Kabi (Water), Selibe Mochoboroane (Development Planning), Likeleli Tampane (Gender and Youth), Motlohi Maliehe (Forestry), Keketso Rantšo (Labour) and Maimane Maphathe (Deputy Public Works), as well as Chinese ambassador Lei Kezhong, Likhoele Principal Chief Lerotholi Seeiso and Member of Parliament Molefi Phamotse, area chief Fako Seeiso and Councilor Sebofi Moeketsi. 3. The second phase of the Ramarothole 70MW Solar Generation Project is expected to involve the construction of a 40MW photovoltaic solar power plant in the locality of Ha-Ramarothole within the district of Mafeteng. Lesotho’s Ministry of Finance plans to finance the second phase with a $79 million China Eximbank loan (see https://www.dropbox.com/s/9x4ixmb6siuhphu/Public%20Debt%20Management%20Report.pdf?dl=0). 4. Well-placed sources in the solar power generation industry told the Lesotho Times that it costs $1 million to build infrastructure to produce 1MW of solar power. However, the Government of Lesotho agreed to an inflated cost of $2.5 million per 1MW. 5. $69,818,683.80 is the China Eximbank loan commitment value that the Government of Lesotho voluntarily disclosed to the Debtor Reporting System (see https://www.dropbox.com/s/kwxk7hpv0dyicpi/DRS%20Official%20Commitments%20from%20China%20through%202020.csv?dl=0). 6. According to a Public Debt Management report published by Lesotho’s Ministry of Finance in June 2022 (https://www.dropbox.com/s/9x4ixmb6siuhphu/Public%20Debt%20Management%20Report.pdf?dl=0), it borrows from China Eximbank on the following terms: 20 year maturity, 5 year grace period, 2% interest rate, and 0.50% commitment fee. For the time being, AidData assumes that these borrowing terms apply to the China Eximbank loan for Phase 1 of the Ramarothole 70MW Solar Generation Project.

Number of official sources

18

Number of total sources

42