Windhoek
NamWater’s raising of N$200 million in two bonds floated on the Namibian Stock Exchange (NSX) is literally one of the first baby steps required to replace the country’s senescent bulk water supply infrastructure for which the bill is estimated at billions of Namibian dollars.
The bonds floated on the NSX bourse are a five-year bond of N$94 million with a coupon rate of 9.05 percent and a seven-year bond of N$104 million with a coupon rate of 9.57 percent.
A buoyant NamWater’s Chief Executive Officer Dr Vaino Shivute yesterday told New Era that the utility “decided to raise money from the local capital market to support the local economy because there are enough funds around for investing in water supply infrastructure.”
Namibia’s state-owned water utility corporation has water treatment plants that are 40 years old, water network supply systems that are clocking above 30 years, and a significant portion of NamWater’s infrastructure, on which the country depends for bulk supply of clean and potable water, is three decades beyond its sell-by date, and need urgent replacement. NamWater also need to put up new pump stations and lay new water pipelines.
NamWater’s infrastructure consists of 16 dams, 17 water treatment plants and 14 water supply networks.
Shivute said the corporation recently produced water master plans for all its operational areas, which all add up to a water master plan for bulk water supply infrastructure in Namibia.
“The water master plan identified infrastructure that need to be upgraded and refurbished as well new investments in water supply infrastructure. There is a need to fund the needs identified by this water master plan,” said Shivute.
To fund this expensive exercise the NamWater board approved a bond programme as “a suitable funding mechanism”. Initially NamWater anticipated raising between N$150 million and N$200 million, however due to an overwhelming positive response from the market the total bid received totalled N$468 million from 39 investors.
Bolstering investors’ confidence in Namwater is the long-term foreign currency rating of ‘BBB-’ and a long local currency rating of ‘BBB’ that the water utility got from Fitch Ratings earlier this year.
In assigning the rating Fitch Ratings looked at NamWater’s financial books and its ability to cover the bond guarantees. NamWater has a customer base of roughly 28 000 customers and 209 large bulk connections on a wholesale basis. The five largest bulk customers comprise 37 percent of total operating revenues.
The City of Windhoek is the single largest customer, representing 24 percent of total operating revenue. Government-related entities constitute the bulk of the company’s customers.
“NamWater has decided to raise funds on the local capital markets to fund part of its funding requirements for water supply infrastructure. The funds could have been borrowed from international financial institutions, development funding agencies or local banks,” said Shivute.
He did not go into details of projects to be covered with the money raised from the NSX but said part of the investments would go towards bulk water projects at the coast where NamWater is putting up pipelines and pump stations.
“NamWater intends to continue to participate in the NSX in future. When the need arises the intention is to issue more bonds in future to fund infrastructure needs,” said Shivute.