9 November 2021
MAJORO ABANDONS FIGHT FOR ROYALTIES
GIFTS CRITICAL WIN TO FRAZER SOLAR
To avoid losing, the Government of Lesotho has offered to delay proceedings in the South African High Court – suspending its demands to restore water royalties after their legal seizure by Frazer Solar (FSG).
A spokesperson for FSG said:
‘Lesotho Prime Minister Moeketsi Majoro’s legal team have offered to delay a critical hearing in the South African High Court two days before it was due to start, gifting Frazer Solar a critical win in its ongoing legal dispute. The decision belies previous statements about the urgency of freeing up much-needed funds. If the Prime Minister was so sure of his case, why offer the delay? It’s not the action of a man who expects to win. Despite months of rhetoric from Dr Majoro on the strength of his government’s case, at the first real test, he has wavered.
‘We have no difficulties with GOL’s demand that the hearing be delayed and royalties remain frozen. In one fell swoop, they have undermined their own case for urgency and their allegedly dire need for the financial royalties.’
In 2018, Frazer Solar GmbH (‘FSG’) signed a binding agreement with the Government of Lesotho (GOL) to develop a major solar energy project with financing from the German government. The project was approved at the express instruction of the Prime Minister Thomas Thabane, but Lesotho’s then Minister of Finance – Dr Moeketsi Majoro – withheld his support. This led to a legal dispute between FSG and the GOL, and in 2020 FSG was awarded 50 million Euros by an independent arbitrator.
Frazer Solar started activities to enforce the arbitral award in May 2021 with global seizures of GOL assets, including the Lesotho Highlands water royalties paid by South Africa to Lesotho. Frazer Solar also obtained a Court Order to seize the royalties being paid by Trans Caledon Tunnel Authority (TCTA) to Lesotho. GOL responded to the TCTA court order in June 2021 with an urgent stay application to stop the seizure and resume payment of the royalties. In August 2021, the South African High Court set 10 November 2021 as the date for the stay application to be heard. By this time, GOL had been joined by the Lesotho Highlands Development Authority (LHDA) and TCTA to fight against FSG.
All parties agreed to the November hearing date.
Legal Proceedings – South Africa
Despite all parties agreeing to the timeline for the hearings, on 29 October 2021 – just six working days before the agreed hearing date – the South Africa government and the Ministry of Water and Sanitation (SAG) submitted an application to join proceedings and participate in the 10 November hearing.
This highly irregular step was intentionally taken to delay the court hearing. As it provided insufficient time for FSG to address the application ahead of the hearing, FSG had no option but to request an urgent case management meeting with the Judge.
FSG offered two options for the Judge to consider:
Either the hearing proceeds as planned without SAG;
SAG be allowed to join but the hearing date be delayed.
On Monday 8 November, two days before the hearing was due to start, the Court ordered a delay with a new hearing date yet to be determined but likely to be in 4-5 months.
Late Involvement by SAG a Smokescreen for Defeat
Frazer Solar maintains that the late involvement of SAG is nothing more than a tactical ploy to engineer a delay in the South African legal proceedings, as GOL believed it was likely to lose resoundingly.
Despite Frazer Solar providing two clear options to the Court, GOL only acknowledged one, a delay. As GOL wrote in its letter to the Judge:
No case management meeting is required at all, as
GOL agrees to a delay
A new hearing date can be set in the future
Meanwhile all interim arrangements stay in place
Frazer Solar is likely to ‘have no difficulties’ accepting this proposal
The fact that GOL did not want to have a meeting with the Judge, who may then have decided for the hearing to proceed as planned, shows that it was running scared of proceeding with its case in court this week.
‘In our opinion, Dr Majoro did not want to face the very real prospect of losing this week, so he has now ensured that the case will not proceed for several months,’ says Frazer Solar.
In order to ensure that FSG agreed to the delay, GOL made the unsolicited concession that it will not seek release of the royalties, thereby nullifying its reason for seeking an urgent stay application in the first place.
‘Under the smokescreen of the SAG application, GOL’s decision to push for a delay completely undermines their argument for ‘urgent’ financial relief contained in the stay application. If Mr Majoro truly believed his allegation that the ongoing withholding of royalty payments has serious economic consequences for GOL, why has he effectively delayed the pursuit of these funds for several months? It’s an apparently contradictory move that makes no sense unless he has doubts about his chances of success.’ says Frazer Solar.
FSG believes its case will inevitably prevail. Each day that goes by, the final amount payable by GOL keeps increasing. ‘Facing the risk of an imminent defeat, Dr Majoro chose to run. However, sooner or later Dr Majoro will face thorough legal scrutiny of this problem of his own making. The sooner he realizes this, the better for all Basotho,’ says FSG.
Notes to Editors
In January 2020, an independent arbitrator ruled in Frazer Solar’s favour concerning a series of contractual breaches committed by the Kingdom of Lesotho, related to a renewable energy project developed by the company. Lesotho was ordered to pay Frazer Solar €50 million in damages but failed to do so.
Consequently, in May 2021, Frazer Solar’s lawyers commenced a worldwide enforcement action against assets held by the Kingdom.