PS Phapano in M55 million tender row

…as Tikoe substation contract award is questioned

Moorosi Tsiane

CONTROVERSIAL Ministry of Energy Principal Secretary, Tankiso Phapano, has once again found himself at the centre of a major procurement controversy following the awarding of a M55 million contract to upgrade the Ha-Tikoe Substation.

The controversy has been compounded by allegations that Mr Phapano lacked the legal authority to issue the award letter, with sources insisting that only the Lesotho Electricity Company (LEC) Managing Director or the designated project manager could formally award the contract.

The project, valued at M55,065,019.19, was awarded to Chinese firm, Jiangsu Etern, despite objections from stakeholders and now suspended LEC Managing Director, Mohlomi Seitlheko, who maintained that both the World Bank and the project’s Steering Committee had suspended the project pending the completion of the Ha Belo Substation. Ha Belo works are yet to be completed.

The Ha-Tikoe project seeks to increase the substation’s capacity from 20MVA to 40MVA to improve electricity supply to industrial areas in Tikoe and surrounding communities, including parts of Thetsane and Semphethenyane.

At the centre of the dispute are claims that the World Bank, which is funding both projects under the Lesotho Renewable Energy and Energy Access Project (LREEAP), directed that resources be prioritised towards completing the delayed Ha Belo Substation before work could proceed on Tikoe.

Tender process questioned

The procurement saga dates back to 2023 when the Ministry of Energy first invited bids for the project.

Among the companies that responded were LSP Construction, RT Tshabalala Electrical & K Technical Solutions, MM Building & Maintenance Construction and Sky Group Joint Venture, Ikageng Electrical Contractors and E Square Engineering, as well as Pasgro & Machine Engineering and WSW Tech (Lesotho) Pty Ltd.

Sources familiar with the process say Ikageng initially emerged as the preferred bidder before the tender was abruptly cancelled and later re-advertised in 2024.

The second bidding round attracted additional companies including Tiro Engineering, KR Holdings, Lead-On Technologies, Amulet Group and Jiangsu, which ultimately secured the contract.

However, unsuccessful bidders have alleged that the procurement process lacked transparency.

According to some of the contractors, they were never formally informed of the outcome of the tender, even though more than 18 months have passed since the contract was allegedly awarded.

“Normally, bidders receive an intention-to-award letter and are afforded a cooling-off period during which they can raise objections,” one source said.

“This time none of that happened. We submitted our bids and never heard anything further. The next thing we learned, through unofficial channels, was that Jiangsu had been awarded the contract.”

Section 74(1) of the Public Procurement Act of 2023 requires procuring entities to notify bidders that they may request explanations or debriefings during the statutory cooling-off period.

Under the Act, the cooling-off period is 10 days following the announcement of tender results.

A source familiar with procurement procedures argued that the failure to notify bidders deprived them of an opportunity to challenge the award before the relevant procurement tribunal.

“If bidders had been informed that Jiangsu was the preferred bidder, those with concerns about the process could have exercised their legal rights. The failure to communicate the outcome prevented that from happening,” the source said.

Questions have also been raised over Jiangsu’s appointment despite several local contractors with previous LEC experience having submitted significantly lower bids.

According to information seen by this publication, LSP Construction bid M31.7 million, Tiro Engineering M39.3 million, KR Holdings M41.3 million, Lead-On Technologies M48.1 million, RT Tshabalala M49.2 million, Amulet Group M55.5 million and B&G M57.2 million.

Although procurement decisions are not determined solely by price, some stakeholders questioned why a company with no previous LEC track record was selected over firms with relevant local experience and lower bid prices.

Seitlheko raises alarm

The allegations are reinforced by correspondence written by Mr Seitlheko before his suspension.

In a letter dated 5 March 2025 and addressed to then Energy Minister Mohlomi Moleko, Mr Seitlheko accused Mr Phapano of repeatedly interfering in operational matters reserved for LEC management and the board.

“I herein wish to draw your attention to a series of directives that have been flowing into my office through a sequel of letters and directives from the Principal Secretary of Energy, Mr Tankiso Phapano, that are utterly operational and have now bordered within the Board’s purview and powers,” Mr Seitlheko wrote.

Mr Seitlheko further stated that during a World Bank mission conducted between 11 and 15 November 2024, the Bank directed that the Ha Belo project be prioritised to avoid escalating costs.

“The World Bank categorically indicated that the Belo Project should be prioritised and finalised swiftly to avert cost overruns and that efforts should be directed towards its completion,” he wrote.

“It also directed or recommended that the Tikoe project should be halted to make room for diversion of funds to the Belo Project.”

According to Mr Seitlheko, the recommendation was subsequently adopted by the Project Steering Committee, effectively preventing him from authorising the Tikoe contract.

He alleged that matters escalated further when Mr Phapano directed him in January 2025 to sign the contract despite the World Bank’s position.

“Following that, on 27 January 2025, another directive to sign the Tikoe contract contrary to the World Bank was given by the Principal Secretary of Energy,” he wrote.

Mr Seitlheko also argued that Mr Phapano had no authority to issue an award letter because the project falls under the LREEAP, which he argued was administered by LEC.

“I should inform your (Minister) office that I had on several occasions informed the said official (Phapano) that I will not be able to implement such a directive owing to the (World) Bank’s instruction and Aide Memoir even before it came to my attention that his office awarded the contract… An award letter he had no authority to issue, as the component falls under LREEAP LEC and the letter is supposed to be issued by the Project Manager or LEC Managing Director,” he said.

He maintained that his refusal to authorise the contract became a source of tension between his office and the Principal Secretary.

Phapano rejects allegations

Mr Phapano has, however, dismissed claims that the project was improperly awarded.

Speaking on a local radio station, he said the World Bank ultimately cleared the project and authorised its continuation.

He explained that the original tender process had been cancelled after details of the evaluation process were leaked to a local newspaper while the matter was still before the LEC Executive Committee.

According to Mr Phapano, investigations conducted by the ministry found no evidence supporting allegations that the initially preferred bidder (Jiangsu) lacked valid manufacturer authorisations.

He said the World Bank subsequently requested documentation relating to the procurement process before carrying out its own review.

“We re-launched this tender in April 2024 and we signed the contract on 27 January 2026,” Mr Phapano said.

“In September 2024, when we were supposed to sign the contract, the Bank froze all activities because of the Belo project. By that time Tikoe had already been adjudicated.”

Mr Phapano said the situation later changed after the World Bank formally approved the project’s continuation.

“On 3 November 2025, the World Bank cleared the upgrading of the Tikoe Substation,” he said.

Following the clearance, he said negotiations resumed with Jiangsu before the contract was eventually signed.

“The contract became effective in March this year and the contractor has already completed the assessment report and preliminary designs, both of which have been approved,” he said.

He added that a Ugandan consultancy firm had been appointed, with World Bank support, to supervise the project and ensure compliance with technical standards.

Efforts to obtain further comment from Mr Phapano this week were unsuccessful, as calls to his mobile phone went unanswered.

Energy and Mining Minister Lejone Mpotjoane referred this publication’s enquiries back to Mr Phapano, saying he was better placed to comment on the matter.

Ha Belo delays

The controversy surrounding the Ha-Tikoe Substation project cannot be separated from the troubled Ha Belo Substation project, which has become one of the country’s most controversial energy infrastructure schemes.

Sources familiar with the matter say the World Bank had advised the government to prioritise completion of the Ha Belo project before proceeding with Tikoe, arguing that the industrial development project in Butha Buthe, which the Ha Belo Substation was meant to service, would unlock more than 3000 jobs once operational. The LNDC has built factory shells meant to house various factories. However, the industry remains nonoperational due to lack of electricity.

The Ministry of Energy had awarded Phaks JV the contract for the construction of the Ha Belo 33/11kV Substation and associated 33kV transmission lines on 18 August 2021. The project was expected to be completed within 18 months.

Work commenced in November 2021 and was scheduled for completion by April 2023 at an initial cost of M86.6 million. However, repeated delays and cost overruns pushed the project’s value to M121.6 million, while the works remained unfinished.

The project comprises three main components: the construction of transmission lines from Ha Mopeli to Ha Belo and from Hlotse to Ha Belo, as well as the development of a power substation at the Ha Belo industrial site.

The project has, however, been dogged by allegations of corruption and mismanagement, amid claims that substantial sums were paid to the contractor despite limited progress on the ground.

In June 2025, the government refunded M22 million to the World Bank after failing to account for funds allocated to the project, further intensifying scrutiny over its management.

The scandal eventually led to criminal charges against former Energy Principal Secretary Themba Sopeng and several co-accused. Prosecutors allege that Mr Sopeng abused his position as chief accounting officer by facilitating the award of the contract to Phaks JV in violation of procurement regulations.

Mr Sopeng, together with Binare Ramochele, Mookho Pule, ‘Mathapelo Silase, Neo Lekhotla, Motsekuoa Phalole, Teboho Mokhethi, Makhabane Leluma, Mojaki Lesenyeho and representatives of Phaks JV, faces charges including corruption, money laundering and embezzlement.

Mr Phapano has repeatedly distanced himself from the scandal, arguing that the contract had already been awarded and project funds disbursed before he assumed office as Principal Secretary in January 2024.

In March 2025, he said he only became aware of the project’s challenges after being briefed during his first week in office.

As costs continued to escalate, Prime Minister Sam Matekane announced in June last year that an additional M50 million would be required to complete the project.

The Ministry of Energy subsequently terminated Phaks JV’s contract, accusing the contractor of failing to deliver the project despite costs having ballooned from the original M86.6 million to nearly M170 million.

To rescue the project, the ministry appointed South African engineering firm Actom (Pty) Ltd at a cost of M49.7 million to complete the outstanding works. The contract was signed on 20 September 2025 by Mr Phapano.

In a statement issued on 8 October 2025, the ministry attributed the cost overruns and delays to poor administration and mismanagement.

The termination of Phaks JV’s contract triggered a legal battle after the company disputed the government’s decision and insisted it remained contractually entitled to continue with the works.

The government subsequently approached the courts seeking confirmation of the termination. While the High Court’s Northern Division initially declined to hear the matter, ruling that arbitration should be pursued first, the Court of Appeal overturned that decision last month, and upheld the government’s right to terminate the contract.

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