Normal

Emergency

Lesotho Highlands Water Distribution

Lesotho Highlands Water Distribution

Phase 1A Project Cost R9.3 bil

Phase 1A Project Cost R9.3 bil

Infrastructure6%

Engineering6%

Environment5%

Royalties3%

Administration4%

Finance Charges

32%

Construction44%

R 13.9 BillionR 13.9 Billion

Phase 1B Project CostPhase 1B Project Cost

R 6.5 Billion Estimated Cost to R 6.5 Billion Estimated Cost to March 2003March 2003

Construction26%

Environment7%

Administration12%

Finance Charges

41%

Engineering7%

Infrastructure7%

Funding SourcesFunding Sources

Funding Sources

Forex Market

Local Market

Export Credit Loans

CommercialLoans

Bond market

Other Loans

Commercial Paper Programme

Phase 1A Sources of FundingPhase 1A Sources of Funding

Other R0.6 bn6%

Commercial Loans

R0.8 bn - 8%

Water Levies R1.7 bn - 18%

Local funding R3.3 bn - 34%

Export Credit Loans

R2.6 bn - 27%

DBSA R0.6 bn7%

R 9.6 BillionR 9.6 Billion

Phase 1B Sources of FundingPhase 1B Sources of Funding

R 6.5 BillionR 6.5 Billion

Local Funding82%

Commercial0%

Multi-lateral9%

Export Credit3%

DBSA6%

LHWP Liability Composition as at 31 January 2001R 14 Billion

DBSA6%

FOREIGN EXPORT CREDIT

12%

FOREIGN COMMERCIAL0%

LOCAL CAPITAL MARKET:WS01

27%LOCAL CAPITAL MARKET:WS02

17%

LOCAL CAPITAL MARKET:WS03

16%

LOCAL MONEY MARKET17%

EIB & WORLD BANK5%

Composition of LiabilitiesComposition of Liabilities

R 14 BillionR 14 Billion

Debt Maturity Profile & Liability Curve

Debt Maturity Profile & Liability Curve

Current

Forecast

5

10

15

20

25

30

Ran

d B

illion

s

WS02CPP

WS01

WS03WS04 & other

010203040506070809101112131415161718192021222324

March

LHWP: Water Flow and Cost Recovery Arrangements

LHWP: Water Flow and Cost Recovery Arrangements

Payment of Delivers LHWPlevy/tariff water

DWAF

Raw water Delivers raw water Tariff

WATERBOARDS

Purified water delivered

ENDUSER

OTHER LARGE

Raw water tariff

MUNICIPALITIES

CONSUMERS(Eskom, Sasol)

DWAF

WaterBoards

Local Authorities

EndUser

Other LargeUsers (Eskom,

Sasol,etc)

TCTA

Net Requirement vs Yield - Lowered DemandTiming of new schemes

1,500

2,000

2,500

3,000

3,500

4,000

Yield : Existing system and LHWP Phase 1A+1B (2730 106m3/a)

TWP (467 106m3/a)

ORANGE (571 106m3/a)

Timing of New SchemesTiming of New Schemes

Lower DemandLower Demand

Comparison of Growth in Demand between 1997/98 and 2000

Comparison of Growth in Demand between 1997/98 and 2000

Period : 2000 - 2030Period : 2000 - 2030

Most Probable demand scenario

Low demand scenario

1997/98 2000

3.64 % 2.18 %

2.89 % 1.72 %

Saleable Water CurvesSaleable Water Curves

Comparison of Saleable Water Curves

500

1,500

2,500

3,500

4,500

1997

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

2033

2036

2039

Mill

ion m

3

1997/98Low Sales

2000 MostProbableSales

2000LoweredSales

Vaal River Tariff - Lowered Demand - Year 2002 termsNo capitalisation, no smoothing tariff

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

Tari

ff

Existing Schemes LHWP1 Cap LHWP1 O&M Tugela Cap Orange Cap

25 Year Constant

35 Year Constant 30 Year Constant

Tariff Scenarios – Lower Demand

Tariff Scenarios – Lower Demand

Example of tariffExample of tariff

R 0.00

R 1.00

R 2.00

R 3.00

R 4.00

R 5.00

R 6.00

0-10kl 11-20kl 21-40kl >40kl

BLOCK

RA

ND

S

TCTA DWAF WATER BOARD MUNICIPALITY

Example of tariff (free water)Example of tariff (free water)

R -2.00

R -1.00

R 0.00

R 1.00

R 2.00

R 3.00

R 4.00

R 5.00

R 6.00

0-6kl 7-12kl 13-20kl 21-40kl >40kl

BLOCK

RA

ND

TCTA DWAF WATER BOARD MUNICIPALITY

RoyaltiesRoyalties

Constitutes of cost savings between LHWP and OVTS (70 m3/s scheme)

Sharing of benefit: 56 % Lesotho vs 44 % RSA

Lesotho: Royalties paidRSA: Lower cost of Project

RoyaltiesRoyalties

Fixed royalty = Capital cost saving(paid over 50 years)

Variable royalty = Lower O&M and electricity cost(based on volume of water delivered)