This dissertation explores the reasons behind the impasse over the implementation of the LHWP II between communities affected by the construction of the Polihali Dam in Mokhotlong District in Lesotho and the Lesotho Highlands Development Authority. This conflict which has threatened the implementation of the project has been looked at in terms of disagreements over the compensation package for the displacement and losses. Using an actor-oriented approach, the contention was that explanations of the impasse should go further than the simplistic explanations of compensation and non-compensation, but should focus on the dynamics of interaction between different actors involved in the Polihali case. The investigation of the particular context of the Phase II implementation reveals a complex arena; where different actors are pursuing different agendas and using the power at their disposal to achieve these agendas eventually struggled to find common ground. It also reveals a need to incorporate the perspective of these actors into any explanation of the impasse. Using this approach, the investigation identifies several factors of which the compensation package is only a part which contributed to the conflict. Chief among these factors was how the LHDA handled the situation. Dislocations are traumatic experiences and require that those affected should be fully involved in decisions that affect their situation, yet the LHDA engagement failed on the basic participation principles. The authority modelled its approach to community engagement on tokenism and allowed people’s consultation, but disregarded their inputs in the final decision making. This resulted in a skewed understanding of society and losses resulting from dam construction, which caused tensions between the authority and the communities. Therefore, this dissertation concludes that; while compensation was certainly a significant aspect in the impasse, the gap between what was compensated and expectations reflects a general lack of knowledge of society and the social dynamics guiding life in these societies, which arose from the failure of the approach adopted by the LHDA. The study therefore advocates a search for a new rural development narrative that will move away from assumption about the viability of small family farms. It also reveals a need to incorporate people affected by large dam development in all aspects of the project that affect their lives. / Dissertation(MSocSci (Development Studies))--University of Pretoria 2020. / Anthropology and Archaeology / MSocSci (Development Studies) / Unrestricted