Lesotho High Court: LHDA Ordered Pay M89.9-Million Compensation for LHWP Phase 1

• The Lesotho High Court has mandated the Lesotho Highlands Development Authority to pay M89.9-million in compensation.
• This payment is for 20 community associations affected by LHWP Phase 1, following 13 years of delays.
• The compensation amount reflects an 8% increase since the LHDA ceased a second tranche of payments in 2013.
• A prior Court of Appeal ruling, favoring the U Khopo Maliba-Matšo Society, established a precedent for the LHDA's obligation to pay.
• The ruling highlights the legal and financial risks for state entities that fail to honor compensation agreements in large infrastructure projects.

This ruling sets a significant precedent for state-owned entities involved in large infrastructure projects in Lesotho, underscoring the legal and financial risks of failing to adhere to compensation agreements with affected communities.

The Lesotho High Court has issued a directive for the Lesotho Highlands Development Authority (LHDA) to disburse M89.9-million in compensation within 90 days. This order, handed down on October 20 by Acting Justice Tšebang Putsoane, addresses long-standing compensation arrears for communities impacted by Phase 1 of the Lesotho Highlands Water Project (LHWP).

This substantial payment is designated for 20 community associations, primarily located in the Thaba-Tseka district. The individual amounts to be received by these associations vary significantly, ranging from M848,000 to M16.2-million. The total sum represents an 8% increase from the amount due in 2013, the year the LHDA unilaterally halted payments for a second compensation tranche.

The Lesotho Highlands Water Project is a major infrastructure initiative designed to supply water to South Africa. Its initial phase led to significant disruptions for local communities, who suffered the loss of vital resources including grazing land, riverine ecosystems, and access to firewood, fish, wild vegetables, and medicinal plants.

The LHDA initially provided a first tranche of compensation in 2003 and 2004, distributed through community associations established under its guidance. A second tranche was scheduled for review and payment in 2013, following a ten-year assessment period. However, the LHDA ceased these payments in 2013, citing a consultant's monitoring report that purportedly found no evidence of compensable losses. An ombudsman's report released in March indicated that Phase 1 arrears had accumulated to more than M142-million by the close of 2025.

The 20 community associations’ successful claim was significantly bolstered by a prior landmark judgment from the Court of Appeal. This ruling favored the U Khopo Maliba-Matšo Society, representing approximately 600 villagers in Bobete, Thaba-Tseka district, who faced similar compensation challenges against the LHDA. The U Khopo Maliba-Matšo Society initiated High Court proceedings in 2020 to demand their second tranche of compensation.

On March 19, 2025, the High Court ordered the LHDA to compensate the Bobete villagers whose livelihoods were disrupted by the construction of the Katse Dam. The LHDA's subsequent appeal was dismissed by the Court of Appeal on November 7, 2025, which affirmed the LHDA's obligation to pay compensation owed since 2013. The appellate court specifically found that the LHDA's decision to discontinue payments without community consultation was both procedurally unfair and unlawful, mandating payment within 90 days. Despite this, the LHDA missed the deadline, as reported in February, though it eventually paid M8.2-million to the U Khopo Maliba-Matšo Society, supplementing the M2.7-million received in 2003. Inspired by this outcome, the 20 associations wrote to the LHDA in November and December 2025 to initiate negotiations. After waiting over six months without a response, as detailed in the founding affidavit by Malesaoana Pitso of the Kamohelo Khoanyane Association, they launched their own case in June 2026, leading to the out-of-court settlement for M89.9-million.

This recent ruling comes amidst broader legal challenges against the LHDA concerning compensation. In July 2025, over 3,000 individuals and 889 businesses filed a case with the Constitutional Court, alleging that the LHDA had denied them fair compensation for land expropriated since the 1980s. These applicants, from Mokhotlong and Thaba-Tseka, claimed some families received as little as 78 cents per square meter, with properties often taken years before compensation was even calculated. Further allegations included the arrest, detention, and torture of community members, and the failure to establish a promised community development fund. The LHDA sought to dismiss this case, arguing that the Mokhotlong Business Forum Development Trust and the Community Resources Development Trust, the entities bringing the claim, lacked the necessary legal standing. In May 2026, the Constitutional Court declined to exercise its jurisdiction, ruling that the applicants had pursued the wrong legal process and that adequate alternative remedies existed under ordinary legislation, such as the LHDA Act, the Land Act, and the Lesotho Highlands Water Project compensation regulations.

This ruling sets a significant precedent for state-owned entities involved in large infrastructure projects in Lesotho, underscoring the legal and financial risks of failing to adhere to compensation agreements with affected communities. Lawyers advising such entities should review existing compensation frameworks and ensure compliance to avoid similar protracted litigation and substantial financial penalties.

Source: Original reporting via GroundUp