Fitch Ratings recently upgraded Namibian Ports Authority’s (NamPort) National Long-Term rating to ‘AA-(zaf)’ from ‘A+(zaf)’ and National Short-Term rating to ‘F1+(zaf)’ from ‘F1(zaf)’, thus resulting in its outlook being stable.
Key assumptions made by Fitch included growth in revenue, stable demand for export commodities, an expansion project that is expected to be completed on time and a drawdown of N$2.9 billion from the African Development Bank amongst others. NamPort’s ratings are aligned with Namibia’s sovereign ratings, reflecting Fitch’s view on the company’s links with the government, including implicit and explicit support that remains strong, given NamPort’s strategic importance to the Namibian economy. NamPorts received a state guarantee for a loan facility from the European Investment Bank (AAA/Stable) in 2002. The Namibian government unconditionally guaranteed the payment obligations of NamPort under the African Development Bank (AfDB, AAA/Stable) loan agreement for N$ 2,9 million, which is the debt-funded portion of its Walvis Bay port expansion. Said Fitch, “the Namibian government has also taken over the expansion of the oil tanker jetty project, which is no longer included in the capital expenditure for NamPorts. On completion of the project these assets will be transferred for management to NamPort (without any liabilities).” The expansion project will include the construction of a new container terminal incorporating an additional 40 hectares of land with a quay length of 600m. The new container terminal will accommodate a capacity of 750,000 twenty-foot equivalent units (TEUs) per year, complementing the existing 350,000 TEUs per year. Upon completion, which is expected by 2017, the new container terminal will realise a deep water depth of 16 metres. “We expect NamPort to be able to generate sufficient cash flow to service the expansion-related debt. However, the size of the port expansion is beyond NamPort’s unsupported balance sheet capacity, which means the government has to provide a significant support by guaranteeing the AfDB loan and providing new equity to NamPort. NamPort will fund 24%, estimated at N$941 million of the project cost. As of May 2015, N$200 million of the government grant had been received with the remaining N$475 million expected before financial year end 2017 (FYE17). The government’s mandate is to ensure that NamPort has adequate funding to become a logistics hub for Namibia and southern Africa,” Fitch said.