Questions & Answers
Why has FSG taken legal action against the Government of Lesotho?
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FSG was left with no option but to pursue legal action when the Government of Lesotho breached its contractual obligations around an agreement to provide 40,000 solar water heating systems, 20MW of solar photovoltaic capacity, 1 million LED lights and 350,000 solar lanterns nationwide.
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What caused the breach in contract?
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The Ministry of Finance and to be specific, the Minister of Finance at the time Dr Moeketsi Majoro, refused to finalise the finance agreement for the main supply agreement that had already been signed. Frazer Solar believes he did this as he preferred a Chinese solar project. It is a question for Dr Majoro why he preferred the Chinese project over the German project, but it is a matter of public record that since the Chinese project was finalised it has been mired in controversy with allegations of overcharging, corruption and is the subject of a Directorate of Corruption and Economic Offenses (DCEO) investigation into ‘the grossly inflated deal … in exchange for bribes.’
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Why was this award determined by an arbitration process in South Africa, not Lesotho?
The contract that the Government of Lesotho signed with FSG had an agreed process through which any disputes would be resolved. Both parties agreed on the appointment of an independent arbitrator in the jurisdiction of South Africa to ensure that any dispute was treated fairly and impartially.
Who is Robert Frazer and why has he been trusted to develop large-scale solar projects?
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Robert Frazer is the founder of Frazer Solar, and an experienced businessman with a wealth of experience leading and delivering energy projects in Australia, Eswatini and elsewhere. Frazer Solar brings a strong technical offer to its partners. For example, the wider company group includes IPP investment and ownership company Frazium Energy Pty Ltd, which is based in Australia with operations in Africa. In addition, Frazer Solar works with funding partners such as KFW, a German development bank and export credit agency, and it has just completed a major solar project on time and on budget in Eswatini.
Was the size and cost of FSG’s solar project unusual or unprecedented?
No, it wasn’t. Prime Minister Majoro has personally been involved in the approval of at least two infrastructure projects for Lesotho with comparable cost and size. In 2018, Dr Majoro approved a road construction project costing $92m USD financed by the Chinese government. In 2019, he finalised a $175m USD solar project at Mafeteng, also financed by the Chinese government. Both projects are of similar or greater financial scale to FSG’s project ($110m USD).
Was FSG’s project approved by the Prime Minister and cabinet?
At every stage preceding the signing of the Supply Agreement, FSG followed the Government of Lesotho’s own guidance for the approval process, including meeting on multiple occasions with key stakeholders including the Prime Minister, Minister of Finance, Minister of Energy, and officials from their ministries.
FSG engaged transparently and openly with all stakeholders and did not deviate from advice provided by Government ministers, including the former Prime Minister who both personally approved the project, and gave assurance to FSG that the project had received all necessary approvals, including Cabinet support.
Who knew that the project had been agreed and signed off?
Before, during, and after the contract between FSG and the Government of Lesotho was signed, FSG led concerted efforts to inform ministers and officials about the project’s strengths and benefits. In addition to numerous briefings held between FSG and Dr Majoro (then serving as Finance Minister), and the extensive interaction between FSG and the Office of the Prime Minister, FSG also informed the Minister of Energy, His Majesty the King, and former Prime Minister Tom Thabane.
FSG also informed the following ministers and ministries: Energy; Public Works; Public Service; Local Government; Home Affairs; Prime Minister’s Office; Small Business; and the Ministry of Finance. Additional engagement was undertaken with: the Government Secretary; Lesotho Energy Company; Lesotho National Development Corporation; Lesotho Electricity and Water Authority; Maseru City Council; National University of Lesotho; Lesotho Chamber of Commerce; and the Lesotho Textile Exporters Association.
Was the contract signed by the Government of Lesotho and FSG legally binding?
Yes. A lawful and binding Supply Agreement between the Kingdom of Lesotho and FSG was completed on 24 September 2018. The Supply Agreement was signed on behalf of the Kingdom of Lesotho by Minister Tsolo, at the express instruction of the then Prime Minister Tom Thabane. The former Prime Minister both personally approved the project, and gave assurance to FSG that the project had received all necessary approvals, including Cabinet support.
Why did Minister Tsolo sign the contract, rather than the Prime Minister?
Mr Tsolo signed the Supply Agreement on 24 September 2018 on behalf of the Kingdom under the express instructions of the Prime Minister Tom Thabane.
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Why didn’t the Government of Lesotho engage with the legal process before May 2021?
The Government of Lesotho was afforded every opportunity to engage with and contribute to the resolution of the initial dispute, and the enforcement proceedings that followed the arbitral award in FSG’s favour. FSG maintained extensive and persistent efforts to notify the Government of Lesotho – and the relevant ministries within it – at every stage of the legal action. On 25 instances over 25 months between 2019 and 2021, GOL (including the Office of the Prime Minister and Dr Majoro himself) were informed in person, by email, or by fax of the existence of the contractual breach, the commencement of arbitration proceedings, the arbitration award, and the pending enforcement action.
Why was there no competitive tender for the FSG solar project?
The Kingdom of Lesotho’s procurement law makes allowances for bypassing competitive tenders for special projects, especially with regard to projects that are reliant on overseas government funding. As Finance Minister, Dr Majoro had spoken publicly to clarify this point. Six months prior to the approval of FSG’s project, Dr Majoro made clear when launching a road project, financed by the Chinese government, that the Government of Lesotho “had not awarded a road construction tender to a Chinese company, but that the terms of the loan allow China to bring its own construction company.” As an infrastructure development funded by a foreign government, FSG’s project was subject to the same allowance.
Were legal letters and notices deliberately concealed from the Attorney General and the Prime Minister?
No, this is simply a baseless conspiracy theory asserted by Dr Majoro in his June 2021 affidavit. FSG has delivery confirmations for at least 25 notifications to the Government of Lesotho over a 25 month period, including to Dr Majoro himself personally. Under oath, Dr Majoro has contradicted his own conspiracy theory as he confirmed he received at least one notification himself. However, he still insists on perpetuating this conspiracy theory by saying that the after the notifications were received by the Government of Lesotho they were then intercepted and concealed. It is common sense and basic logic that it is completely implausible for all of these received notifications to have been intercepted and concealed, which if true would mean that Dr Majoro intercepted and concealed documents from himself.
Was it realistic to expect the Government of Lesotho to pay back a €100m loan over 20 years?
Yes of course as the project was cash flow positive, meaning that the savings in imported electricity would have been greater than the cost of the project loan including interest. In addition, the loan was insured meaning that in event of non-payment by the Government of Lesotho due to no fault of its own the insurance policy could be called upon to repay the remaining loan amount. The existence of insurance cover was a key benefit over other foreign government loans provided to the Government of Lesotho i.e. Frazer Solar understands that the Chinese loans are not similarly insured. Furthermore, the electricity savings guaranteed by FSG’s solar project would have covered all repayment costs of the €100m in less than ten years for products with a lifespan and performance guarantee up to 25 years.
Is it true that the GOL has successfully halted legal proceedings in South Africa?
No. At present, counsel for both parties are preparing for a court hearing in November 2021. In the interim, no asset seizures or provisional seizures have been released or ceased by Frazer Solar.