NamPower to Raise $496 Million to Invest in Grid, Output

Namibia Power Corp. plans to raise 5 billion Namibian dollars ($496 million) in bonds and loans to expand its transmission networks and invest in generation.

The funds will go toward NamPower’s 13 billion-Namibian-dollar investment program over the next five years, Managing Director Paulinus Shilamba said yesterday in an interview. The balance will come from its own cash reserves.

NamPower needs money to finance its share of investment in a planned $1.2 billion power plant that will use natural gas from the Kudu fields off the southern Namibian town of Oranjemund. The utility, which has suffered a 70 percent decline in output from its Ruacana hydro plant because of a drought, is also in talks to import more electricity from Zambia, Mozambique and Zimbabwe.

“The power-supply situation in Namibia will remain critical until the commissioning of a baseload power station in 2018,” Shilamba said, referring to the 800-megawatt Kudu plant.

NamPower will tap its traditional financiers for the funding, the director said, citing the European Investment Bank, Germany’s KfW Group and the French Development Agency.

“From next year onwards we have to start raising the money,” he said. “NamPower is very good at raising financing through bonds.” The state-owned utility has previously obtained financing from KfW and the French Development Agency, he said.

Bond Yields

Yields on NamPower’s 500 million rand ($49 million) of bonds due July 2020 have risen 117 basis points, or 1.17 percentage point, this year to 8.48 percent as of Nov. 25. Average rates on African dollar-denominated sovereign debt have risen 144 basis points, according to JPMorgan Chase & Co. Indexes, as the Federal Reserve considers an end to stimulus that has boosted demand for emerging-market assets.

A net electricity importer, Namibia is negotiating to bring in 100 megawatts from Zambia in addition to the 50 megawatts it already receives, 100 megawatts from Mozambique and 50 megawatts from Zimbabwe.

NamPower, based in the capital Windhoek, plans to spend 7 billion Namibian dollars to extend its grid network over the next five years, Shilamba said. “Some of the transmission expansion projects are already being implemented,” he said.

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