Felix Njini Windhoek

Namibia Power (NamPower) would sell a bond of N$2.5 billion (R2.5bn) this year to raise cash for the 800-megawatt Kudu natural gas-fired power plant, managing director Paulinus Shilamba said this week.

An additional N$2.5bn would be raised through debt from the utility’s traditional lenders, which include the European Investment Bank, Germany’s state-owned KfW Group and France’s Agence Française de Développement, Shilamba said.

NamPower needs money for its share of investment in the planned $1.2bn (R12.6bn) plant that will use natural gas from the Kudu gasfields off Namibia’s southern coast.

The utility, which suffered a 21 percent decline in output from its Ruacana hydropower plant last year because of dry weather, relies on imports from countries including South Africa and says electricity supply will remain extremely tight until Kudu starts generating in 2018.

NamPower owns 51 percent of the facility, while Zambia’s Copperbelt Energy has agreed to take a 30 percent equity stake.

“We are going to register a bond in Namibia very soon,” Shilamba said. “We have to go into the market before the end of the year. Details on the bond will be finalised soon.”

NamPower was working out the exact pricing and maturity of the bond, which would be issued before December, he said.

Money raised from the market and through debt would complement NamPower’s cash reserves of about N$5bn, Shilamba said.

The contract to construct the plant would be signed in December, with building to start in March next year, he said.

“We are busy evaluating the tenders at the moment,” he said.

Development of the project has been delayed for years as NamPower focused on smaller projects.

The funds raised would also go toward backing a 30 percent stake that NamPower will own in a planned thermal power plant in the coastal Erongo region. NamPower has invited bids for the 250MW plant that will cost N$3bn. Construction is expected to start in the first quarter of next year.

Furthermore, the company planned to spend N$7bn upgrading and strengthening its transmission network systems over the next five years, Shilamba said.

“We are going to start investing heavily early next year,” he said. “These projects require serious spending.” – Bloomberg