The Lesotho Highlands Development Authority (LHDA) has started construction works including Polihali Dam, Polihali Transfer Tunnel and the Senqu Bridgeon water transfer works for Phase II of the Lesotho Highlands Water Project (LHWP). 

In Phase II, the South African government covers the costs of water transfer infrastructure, livelihood restoration, compensation, and environmental programs. The Lesotho government covers the costs of hydropower infrastructure and related expenses. This phase includes the construction of the Polihali Dam, a 38km water transfer tunnel, roads, bridges, power lines, and communication systems. 

The Polihali Dam is a key component of LHWP Phase 2. It will be constructed downstream of the Seqhu and Khubelu Rivers, featuring a concrete-faced rock-fill embankment dam wall. The dam will supply water to the Gauteng region of South Africa and generate hydroelectricity for Lesotho. Phase II will significantly increase the water supply rate. Additional infrastructure includes the construction of new bridges, a stormwater drainage system, road ancillaries, and a new 132kV transmission line.