The first half of 2010 saw gaining momentum in the second phase of the Lesotho Highlands Water Project (LHWP), which involves the building of Polihali dam some 5km downstream of the confluence of Khubelu and Senqu rivers, in Mokhtolong District.

Construction of the 165m high / 2.2 billion cubic meter dam (the R7.3 billion cost being payed for by South Africa)  is set to start in 2012 and will take about 5 years. Water should flow into South Africa in 2018. Costs will also cover infrastructure and compensation of 13 000 families that will be re-located to other areas.

Water from this dam will also be directed to the Vaal River, as with Phase I of the project (which involved the building of Katse and Mohale Dams, as well as Muela Hydro-power Station). Additional hydro-power will also be part of the project, which the Lesotho government will be paying for. It will supplement their own power grid and could also be exported.

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