The Second Loan Agreement was signed on behalf of the Kingdom of Lesotho by H.E. Mr. Kenneth Mohlabi Tsekoa, Minister for Foreign Affairs and International Relations, and was signed on behalf of the Fund by H.E. Sheikh Sabah Khaled Al-Hamad Al-Sabah, Deputy Prime Minister and Minister of Foreign Affairs and Minister of State for Cabinet Affairs and Chairman, Board of Directors of Kuwait Fund for Arab Economic Development.

The Project aims at meeting the domestic and industrial water demand up to year 2025 in the capital Maseru and the towns of Roma, Mazenod, Morija, and Teyateyaneng, through the construction of a dam and appurtenant facilities in the lowlands at Metolong on South Phuthiatsana River 35 Km from the capital.

The Project consists of preliminary works which consist of 12 Km long gravel access road to the Dam location and the provision of rural roads between the villages on both sides of the river and across the river, permanent accommodation and offices for the staff for Project operations together with the necessary water, electricity and other social services. The Project also includes: (a)  construction of a roller compacted concrete dam, 83m high with a crest length of 278m and impounding of about 63.7 million cubic meters, with a spillway and other relevant structures; (b) construction of and the provision for the necessary pumps and ancillary electrical and mechanical equipment for four pumping stations, namely, dam raw water pumping station, high lift pumping station at the water treatment plant, Roma pumping station, and Ha Mantsebo pumping station, to pump the raw water from the dam reservoir to the treatment plant and the treated water from the treatment plant to Maseru, Roma, Mazenod, Morija, and Teyateyaneng respectively.; (c)  construction of a water treatment plant near Ha Seeiso and the provision of the necessary equipment, electrical and mechanical works.  The yield of the treatment plant is an average capacity of 75,000 cubic meters per day to a peak capacity of 93,400 cubic meters per day; (d) provision and construction of pipelines to transfer water as follows: a 700m long 1500mm pipeline, from the dam to the treatment plant. A 2.5 km 1200mm main pipeline from treatment plant to the Command reservoir. A 36 km Primary pipeline 1200mm - 800mm to Maseru. 63 km secondary pipelines of 460mm – 300mm to Roma, Mazenod and Morija. 25 km of secondary pipelines 460mm – 300mm to Teyteyaneng; (e) construction of four reservoirs along the route of the above main and branch pipelines, namely, Command reservoir, Mpilo reservoir, TY Command reservoir, and Ha Mantsebo reservoir; (f) Engineering services for the detailed designs, preparation of tender documents, supervision of construction of the dam, water treatment plant, pumping stations, and pipelines;(g) Panel of experts for the dam to provide services to the Metolong Authority to insure the dam safety; (h) Land acquisition and compensation to affected inhabitants; (i) Environmental and Social Management programs to protect the natural environment and livelihood of affected inhabitants.  The Project is expected to be completed during the first half of 2014. 

The total cost of the Project is estimated at about Maloti 3.18 billion, equivalent to about K.D 121.6 million, of which about Maloti 2.09 billion, equivalent to about K.D 79.89 million and representing about 65.7% of the total cost of the Project, will be in foreign exchange.  The combined Kuwait Fund Loans will cover about 11.5% of the total costs of foreign exchange, or 5.7% of the total cost of the Project.

The Second Loan is made for a term of 25 years, including a grace period of 5 years, and is to be amortized in 40 semi-annual installments, the first of which will be due on 01/11/2016, in accordance with the Loan Agreement, after the expiry of the said grace period. The Second Loan bears an interest rate at 1.5% per annum, in addition to 0.5% per annum to cover administrative costs and other expenses incurred in the implementation of the Loan Agreement.

By extending this loan, the Fund will have provided 7 loans to the Kingdom of Lesotho, as the Fund already made 6 loans to the Kingdom of Lesotho with a total amount of K.D. 13.7 million, equivalent to about US$46.58 million, for the financing projects in various sectors.