28 May 2025 by Monyane Khau

A South African Chief Delegate to the Lesotho Highlands Water Commission says Lesotho owes South Africa M513 million in outstanding value-added tax (VAT) refunds.

Lesotho’s Minister of Natural Resources, Mohlomi Moleko, confirmed the matter in an interview with Uncensored News on May 28, 2025, stating: “It is true that there is that issue, but I cannot confirm the exact quantum.”

Moleko referred this publication to Lesotho’s Chief Delegate to the Lesotho Highlands Water Commission, Mafiroane Motanyane, for a detailed report on the issue. However, efforts to reach Motanyane were immediately unsuccessful, as his mobile phone was engaged at the time of contact.

Meanwhile, Teboho Nkhahle told South Africa’s parliamentary Portfolio Committee on Water and Sanitation that the M513 million debt stems from VAT refunds Lesotho has failed to remit to South Africa since February 2024.

Lesotho’s obligation to refund South Africa for water-related taxes dates back to a 1999 protocol signed under the Lesotho Highlands Water Project (LHWP). As part of this agreement, Lesotho committed to reimbursing South Africa for taxes such as corporate income tax and fringe-benefit tax that were levied during the construction of Phase I of the LHWP, including the Katse and Mohale dams.

In 2012, it was reported that Lesotho had repaid South Africa R341 million — a combination of the M186 million principal and M156 million in accrued interest. These repayments were made under the joint governance structure established to manage the multi-billion-rand water transfer scheme, which supplies water from Lesotho’s highlands to South Africa’s industrial heartland.