1. GOVERNMENT OF THE KINGDOM OF LESOTHO Water and Sewerage Company (WASCO) Greater Maseru Water Supply Feasibility Study & Preliminary Design Results of Financial Analysis January, 2016

2. By location and Options Total Initial Investment (in US$) Working Capital (in US$) Re-Investment Costs in 2030 (US$) Whole Project 12,950,044241,3952,568,010 Package 1 (South) 2,474,47833,630433,793 Ha Makhoathi 884,9709,510140,767 Ha Bosofo 339,7404,47261,594 Mazenod Haluka 551,0308,56967,442 Ha `Masana 698,73811,078163,989 Package 2 ( South West): 3,256,924104,936870,094 Ha Tsautse 124,3743,44614,501 Qoaling Option 1 2,581,13093,403700,279 Qoaling Option 2 2,811,43093,403791,479 Ha Ts`iame 406,9502,453113,316 Ha Lesia 144,4705,63541,998 Package 3 (North East): 7,218,643161,6761,264,123 Ha Mabote Option 1 1,582,49023,534267,672 Ha Mabote Option 2 1,502,49037,431176,472 Ha Mabote Option 3 1,854,09023,534176,472 Ts`enola 1,531,39057,611413,410 Foso/ Marabeng/ Berea, Option1 4,649,02342,666856,642 Foso/ Marabeng/ Berea, Option2 4,184,76366,634674,242

3. Economic & Social Benefits of Water Supply Project 1.The difference in willing to pay for water, since most of the inhabitants in the selected urban center is purchasing water from private venders

4. Economic & Social Benefits of Water Supply Project 1.The reduction in the maintenance cost of household water pumps, fitting and lines. The result of the household expenditure survey and poverty survey in Lesotho indicate that an average household expense is M50 per month on maintenance of the water pumps and fitting for water. The project is expected to eliminate these expenses at the household level.

5. Economic & Social Benefits of the Project 3. The reduction of the investment costs of water storage at the household level, since all the houses who are not connected to water system are installing water storage with a capacity 2-4 m3. Therefore, it was assumed that the new non-already connected houses will not need to invest in water storage tanks.

6. Economic & Social Benefits of the Project 4. Many inhabitants are relying on purchasing water for drinking and sanitation purposes from mobile tankers, it is expected that dwellers will not purchasing any more water from tankers 5. The Increase in property value (House Value) is another indirect benefit as a result of water connection

7. Economic & Social Benefits of the Project 6. The indirect benefit of the project is to decrease the load on girls and adult women from carrying water to their houses

8. Economic & Social Benefits of the Project 7. The reduction in diarrheal diseases incidences could be reduced as a result of improving health conditions. The cost-avoided associated with diarrheal disease is one of the indirect benefit of the water supply project. It is expected that the diarrheal incidences will be reduced to be similar to other urban center in Lesotho which have water projects. However, this revenue was considered by a reduction of DALYs to from 4.6 to 2.3 DALYs as a result of improving water connection and water provision to dwellers

9. Economic & Social Benefits of the Project 6. Reduction in infant and child mortality rate. It is expected that the project will have a great influence on decreasing the infant and child mortality rate, improving health condition by providing reliable clean water is expected to reduce mortality rate of children less than five years

10. Summary of Economic & Social Benefits The Difference in Willing to Pay for Water Reduction of the Maintenance Cost of Water Pumps Reduction of the Investment Cost in Water Storage Increase the Value of Property Decrease the Burden on Women and Girls from Carrying Water Direct Health Effects - Value of Loss-of-Life Avoided. - Direct Health Expenditure Avoided. -The Reduction in Diarrheal Diseases of Children Reduction in Infant and Children Mortality Rate.

11. Financial Evaluation of the Project The Economic Internal Rate of Return (E-IRR): The Economic Benefit/Cost Ratio (E-B/C ratio): The Economic Net Present Value (E-NPV): The Economic Profitability Index (PI): The Payback Period:

12. Economic Results Indicators IRR B/C @ 6% NPV @ 6% Payback Period Profitability Index AIC-Full Cost Recovery Unit PercentRatio000,US$YearsRatioMaloti/m 3 Package 1 (South) 59.4%2.054,8643.002.949.26 Ha Makhoathi 45.7%1.861,3944.002.5611.27 Ha Bosofo 58.9%2.006303.002.839.92 Mazenod Haluka 53.9%1.858693.002.558.69 Ha `Masana 84.6%2.411,9253.003.717.69 Package 1 ( South West):

13. Economic Results Indicators IRR B/C @ 6% NPV @ 6% Paybac k Period Profitabilit y Index AIC-Full Cost Recovery Unit PercentRatio000,US$YearsRatioMaloti/m 3 Package 2 ( South West): 204.4%2.6612,6182.004.714.55 Ha Tsautse 136.2%2.052882.003.255.40 Qoaling Option 1 * 59.3%2.9010,6783.004.993.87 Qoaling Option 2 52.5%2.7410,3813.004.574.20 Ha Ts`iame 17.9%1.141128.001.2721.68 Ha Lesia 102.3%2.856622.005.413.78 Package 2 ( South West):

14. Economic Results Indicators IRR B/C @ 6% NPV @ 6% Payback Period Profitability Index AIC-Full Cost Recovery Unit PercentRatio000,US$YearsRatioMaloti/m 3 Package 3 (North East): 57.5%1.9512,9483.002.759.50 Ha Mabote Option 1 49.0%1.722,1363.002.339.46 Ha Mabote Option 2 * 52.5%1.792,2343.002.459.08 Ha Mabote Option 3 38.1%1.571,9314.002.0311.06 Ts`enola 133.6%2.585,3572.004.375.81 Foso/Marabeng/Berea, Option1 57.5%1.9512,9483.002.759.50 Foso/Marabeng/Berea, Option2 * 49.0%1.722,1363.002.339.46 Package 3 (North East)

15. Summary of Economic Results Indicators IRR B/C @ 6% NPV @ 6% Payback Period Profitability Index AIC-Full Cost Recovery Unit PercentRatio000,US$YearsRatioMaloti/m 3 Whole Project 61.8%2.1329,3853.003.217.38 Package 1 (South) 59.4%2.054,8643.002.949.26 Package 2 ( South West): 204.4%2.6612,6182.004.714.55 Package 3 (North East): 57.5%1.9512,9483.002.759.50 Whole Project & Packages

16. Summary of Project Economic Feasibility Indicators Total Population Additional Population served Annual Water Supply Total Investment Investment per person Investme nt per m3 Internal Rate of Return B/C @ 6% Profita bility Index Project Site person m3m3 US$(US$/person(US$/M3PercentRatio Whole Project93,05270,0763,588,58712,950,0441393.6161.8%2.133.21 Package 1 (South)14,05512,673541,5832,474,4781764.5759.4%2.052.94 Ha Makhoathi4,1164,117158,776884,9702155.5745.7%1.862.56 Ha Bosofo1,8011,78768,928339,7401894.9358.9%2.002.83 Mazenod Haluka3,3431,975128,932551,0301654.2753.9%1.852.55 Ha `Masana4,795 184,948698,7381463.7884.6%2.413.71 Package 2 ( South West):38,97323,1051,503,2143,256,924842.17204.4%2.664.71 Ha Tsautse1,22842447,355124,3741012.63136.2%2.053.25 Qoaling Option 134,68620,4741,337,8482,581,130741.9359.3%2.904.99 Ha Ts`iame980 37,799406,95041510.7717.9%1.141.27 Ha Lesia2,0791,22880,212144,470691.80102.3%2.855.41 Package 3 (North East):40,02434,2971,543,7907,218,6431804.6857.5%1.952.75 Ha Mabote Option 28,7395,160337,0861,502,4901724.4652.5%1.792.45 Ts`enola14,23612,090549,1481,531,3901082.79133.6%2.584.37 Foso/Marabeng/Berea, Option217,04917,048657,5564,184,7632456.3635.0%1.602.13

17. Conclusions The above Result indicates that the project is economically feasible and attractive to the public investors. The opportunity cost of capital is normally the interest rate on borrowed capital available in the economy, at the time of the project implementation. The summary of output of the economic analysis shows that all packages and sub-project projects are feasible