THE Lesotho Government has filed an application before a South African High Court seeking an order to stop the German solar company, Frazer Solar GMBH from taking any further action against Lesotho until the matter has been dealt with by the courts.
June 20, 2021
4 min read
Lesotho asks SA court to intervene in solar dispute
Prime Minister Dr Moeketsi Majoro
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According to a statement from the Office of the Prime Minister, the government disputes that there is a binding supply agreement with the solar company that can be enforced, adding that Frazer Solar is fully aware of that.
Frazer Solar has begun seizing Lesotho’s assets abroad in order to enforce €50m in contractual damages. It has already taken control of royalties that Lesotho earns on water and power supplies to South Africa, after a US court gave it the go-ahead last month to employ tactics similar to those used by creditors to chase countries that have defaulted on their debts.
Lesotho reneged on an “outstanding opportunity” to acquire renewable energy assets, including a 20-megawatt solar plant, when it abandoned a deal to finance the project in 2018, Frazer Solar said.
This was despite sign-off by the office of the then-prime minister Motsoahae Thabane, the solar company says.
A South African arbitrator this year said the company should have about half of the €100m in damages it sought.
Prime Minister Dr Moeketsi Majoro said he did not know about Frazer Solar’s damages claim until it was reported in South African newspapers.
“Lesotho’s properties both in Lesotho and overseas are protected and we don’t think the action that they are proposing will succeed,” Majoro said last month.
But Frazer Solar said that it had notified the government more than two dozen times about its lawsuit and the seizures.
The statement from the PM’s office further reveals that as a result of the sensitive nature of this case, the government has been sparse in providing detailed information so as to avoid exposing its defence strategies.
The statement says the government authorised the Attorney General to do everything to prevent any enforcement action by Frazer Solar GMBH and protect all assets belonging to Lesotho.
It says the government further appointed four law firms in South Africa to work collectively to formulate an application for stay of execution at the same High Court in South Africa that turned the arbitral award into an order of court.
It shows that the government has received support from the Africa Legal Support Facility of the African Development Bank, which deployed a team of legal experts within one week of request and has been offering assistance since then.
The statement says the government dispatched a ministerial delegation to South Africa to engage the authorities there on this matter which affects both countries on several fronts. It further adds that the authorities in Germany have also been apprised of these developments and Lesotho has requested assistance.
It highlights that the Commission of inquiry which was established, will help Basotho to learn and understand what transpired up to the point an order to sieze Lesotho's assets was issued in South Africa.
The commission is to resume its sitting next week and will complete the findings within a period of one month.
Frazer Solar has also moved to seize Lesotho’s shares in the Mauritius-based West Indian Ocean Cable Company, one of Africa’s biggest internet infrastructure providers.
For Lesotho, which has few major industries and a small tax base, the seizures represent a big blow.
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Public spending makes up half of the country’s gross domestic product. More than half of the two million population are subsistence farmers and many people are forced to find work across the border in South Africa. Remittances are equivalent to about a fifth of GDP.
The collapse of the Frazer Solar project is also bound up in the legacy of political instability in Lesotho, where institutions have been weakened by a history of graft and fragile coalition governments.
Majoro took power last year after octogenarian Thabane stepped down over a police investigation into the murder of his estranged wife. Thabane denies wrongdoing.
The German company said that it had met the Lesotho government’s guidelines on deal approval “at every stage preceding the signing of the contract” and it “was assured by the office of the prime minister that the project had received all necessary approvals”. FINANCIAL TIMES/METRO