Lesotho Highlands Water Project II drowns in scandal: R53bn cost surge and pollution crisis threaten SA’s water security

Key topics:Acidic wastewater leak halts key cross-border water scheme.Costs balloon from R8 billion to R53 billion.DA demands transparency; OUTA calls it systemic failure.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Kerry Lanaghan.The Lesotho Highlands Water Project Phase II (LHWP2), once hailed as a cornerstone of regional cooperation and a lifeline for South Africa's economic hub, has become mired in scandal, pollution, and political inertia. With costs spiralling from an initial R8 billion to a staggering R53 billion, and a major environmental crisis halting construction, the project's integrity and future hang in the balance.Pollution crisis halts constructionThe latest blow came in May 2025, when construction was abruptly suspended after acidic wastewater from a contractor contaminated the Katse Dam and nearby rivers - critical water sources for Gauteng, the Free State, North West, and parts of Mpumalanga. The environmental breach, which went undetected until it tainted drinking water supplies, has raised serious concerns about governance and oversight.Julius Kleynhans from the Organisation Undoing Tax Abuse (OUTA) described the situation as "a critical governance failure." He criticised the Department of Water and Sanitation and the project's implementing agency for failing to enforce environmental compliance. "This endangers the long-term affordability and sustainability of water for millions of South Africans and our economy," he warned.Skyrocketing costs and lack of transparencyBeyond the environmental fallout, financial mismanagement has come under renewed scrutiny. Budgeted initially at R8 billion in 2008 (equivalent to about R19 billion today), the LHWP2 price tag has exploded to R53 billion, with R11 billion added in just the past year. This dramatic escalation has fuelled suspicions of poor contract management, mismanagement, and political interference."The Auditor-General has confirmed the R11 billion increase. It's a symptom of systemic failure,” said Kleynhans. “And yet, no one has been held accountable."DA demands answers through PAIAAmid months of silence from Water and Sanitation Minister Pemmy Majodina, the Democratic Alliance (DA) has escalated its response. On 6 August 2025, Stephen Moore MP, DA Deputy Spokesperson on Water and Sanitation, filed a Promotion of Access to Information Act (PAIA) request demanding the release of documents related to the government's promised investigation into the cost overruns."The Minister acknowledged a probe would happen," Moore said, "but no information has been provided to Parliament or the public." The DA's PAIA application seeks:The record of the decision to investigate LHWP2 cost escalations;The appointment letter of the individual or body leading the investigation;The terms of reference outline the scope and timeline of the probe."We welcome an investigation - but opaque processes damage public trust,” Moore added. “If the Department is serious about accountability, it must respond urgently.”Accountability and oversight are urgently neededThe project's cross-border nature complicates the issue, limiting the jurisdiction of South Africa's Auditor-General. Both OUTA and the DA are calling for Minister Majodina to empower oversight bodies such as the Green Scorpions and the Special Investigating Unit (SIU) to intervene if the matter falls within their remit.With municipalities already owing over R28 billion to water boards and public confidence waning, further delays or scandals could push South Africa's water supply infrastructure into a deeper crisis. "Water is not just a service, it's a national security issue," Kleynhans stressed.Without decisive action to restore oversight, transparency, and environmental integrity, LHWP2 risks becoming a monument to mismanagement - rather than a beacon of regional cooperation and progress..The full press release from the DA can be read below:DA submits PAIA application for answers on Lesotho Highlands Project Phase 2 probeby Stephen Moore MP - DA Deputy Spokesperson on Water & Sanitation Date: 06 August 2025Release: immediateYesterday I submitted a formal Promotion of Access to Information Act (PAIA) application to the Department of Water and Sanitation, after months of silence from Minister Pemmy Majodina.Despite the Minister’s public acknowledgment that a probe into the escalating costs of Phase 2 of the Lesotho Highlands Water Project (LHWP) would be conducted, no further details have been shared with Parliament or the public. A previous letter sent on 8 May 2025 requesting clarity on the matter went unanswered, prompting a second letter on the matter, which has likewise received no substantive reply.The DA has therefore taken formal steps to compel the Department to release the following documentation:The record of decision to investigate the escalating costs of LHWP Phase 2;The appointment letter of the individual or body tasked with conducting the investigation;The terms of reference guiding the scope and timeline of the probe.The Lesotho Highlands Project Phase II is of national strategic importance, particularly for water security in Gauteng. South Africans deserve transparency on how a project that was initially estimated at R8 billion has reportedly ballooned to R53 billion, over R11 billion of which was in the last year alone.Taxpayers are footing the bill, and we have a right to know whether proper procurement, contract management and oversight mechanisms have been followed.We would like to reiterate that while the DA welcomes any investigation into the cost overruns, the Department’s failure to proactively disclose details of the probe raises serious red flags about the sincerity and robustness of the process.Opaque processes damage public trust. If the Department is genuinely serious about accountability, it must respond to this PAIA request with urgency.Anything less suggests a deliberate attempt to withhold critical information from Parliament and the public.The DA will continue to fight for transparency and sound financial governance in all major water infrastructure projects—especially as South Africa grapples with a deepening national water crisis.

Lesotho Highlands Water Project II drowns in scandal: R53bn cost surge and pollution crisis threaten SA’s water security

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