Lesotho has signed a $6.2 billion investment deal with US company Convalt Energy. That is about R100 billion, and the Lesotho government calls it the largest foreign investment in the country’s history.
The money is meant for the Kobong hydropower plant and an AI data centre. The project is still at the feasibility stage, IOL Business Report said.
“We need to support this project as Basotho,” Lesotho Energy Minister Lejone Mpotjoane said.
US Assistant Secretary of State for African Affairs Frank Garcia said the plan joins a 1,200MW pumped storage hydropower plant with a 900MW AI data centre. He said it would raise Lesotho’s power generation by about 1,600%.
Garcia said the project would turn Lesotho from a power importer into a net exporter in the region. He said it would also create about $2 billion in US energy equipment exports.
Convalt is part of ACO Investment Group. The company said Kobong would be its first hydropower and data centre project. Chief executive Hari Achuthan said AI cannot grow without reliable power, water, fibre and cooling.
The agreement was signed on 4 June to start a 12-month feasibility study. No building timeline has been made public. Convalt must still finalise water use plans and a power purchase agreement before work can start.
Mpotjoane said Lesotho is not putting in any money. Convalt said the project will be privately funded without government guarantees. It said funding details will be shared once the study ends.
Lesotho produces just 72MW of power, while peak demand is 240MW. The country spends more than R600 million a year buying electricity from Eskom. Mpotjoane also warned that Lesotho must meet its own needs before it sells power to others.
The Lesotho Electricity Company said the country gets about 40% of its electricity from Eskom. In 2024, Lesotho imported 438 gigawatt hours of the 970GWh it used.
At the same time, Lesotho water supplies about 60% of Gauteng’s demand, according to a South African parliamentary committee. South Africa pays Lesotho $220 million a year in royalties for 780 million cubic metres of water.
In March, Lesotho Natural Resources Minister Mohlomi Moleko said his country wants to negotiate royalties and compensation with Pretoria under a new water deal.
Lesotho senior energy adviser Albert Butare said the plans include a power line from Polihali to Durban. He said fibre links would also connect to undersea cables through Durban. Neither government has said who would buy any extra power.
At a launch event hosted by the US Embassy in Maseru, US Chargé d’Affaires Thomas Hines called the investment “trade over aid”. The embassy said Kobong is part of $7.3 billion in business deals it helped set up over 18 months.
The deal has also faced questions. Reports said Public Works Minister Matjato Moteane is a shareholder in Sekhametsi Investment Consortium. Mpotjoane named that firm as a possible local partner for the project.
Moteane said he declared his interest to cabinet and will step away from project talks.
The MNN Centre for Investigative Journalism reported that a Convalt solar factory project in New York never went ahead, despite a $1.05 million public loan. The matter ended in a settlement, MNN reported.
MNN also reported that Convalt and Achuthan were named in a 2022 US civil lawsuit alleging fraud. The claims were never tested in court. Mpotjoane told MNN the company had explained the case and he considered the matter closed.
Funding details for the Kobong project are only expected once the 12-month feasibility study is complete.
Source: this article is based on reporting by IOL Business Report. Image: IOL Business Report. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.