City to privatize water works
The City of Windhoek is toying with the idea of re-financing its waste water treatment infrastructure which is in urgent need of N$560 million to upgrade the Gammans Waste Water Treatment Plant.
It was announced during the monthly Municipal Council meeting at the Khomas Regional Council last week that the City is considering a short term financing strategy to consolidate the six water treatment and reclamation facilities, to upgrade its waste water infrastructure and to improve the efficiency of its commercial operations by sharing resources.
“The proposal is an unusual approach to management of utilities, but with thorough and methodical development this approach could be successfully established to confirm the Windhoek Council as leader in the development of innovative solutions to complex problems.” the council stated.
“The creation of a legally and economically self-contained entity in the form of a Special Purpose Vehicle (SPV) to attract private forms of finance, replacing the role of government in traditional public procurement” is punted as the solution to the City’s funding problems.
“Granted that approval is obtained from Council, financing agencies will be approached for formal discussion with existing and other private sector partners for further development and refinement of the proposed structure.”
The City Council sees the establishment of a majority Council-owned Special Purpose Vehicle which allows for a fixed minority ownership from selected private sector partners, as the means to improve existing infrastructure and to improve and accelerate future capacity. Funding through the SPV will provide value through access to technology, foreign funding and expert skills.
Control over large scale capital procurement is proposed to remain with the Council in the form of the Local Tender Board.
Of the six plants used for water treatment, only three are operated by the City of Windhoek itself. These are the Gammams Waste Water Treatment Plant that produces raw water for re-use, the Otjomuise Waste Water Treatment Plant for domestic sewage treatment and the old Goreangab Reclamation Works for production of irrigation water.
The Gammans Re-use Plant, a separate installation from the main Gammams Waste Water Treatment Plant, is also due for maintenance in two years and will cost N$450 million. Additionally, the Mix Waste Water Treatment Plant is also in need of N$25 million over three years. The upgrading of the Otjomuise Waste Water Treatment Plant also needs a facelift in five to eight years at an estimated cost of N$125 million.
“The standard of operation at these plants has deteriorated significantly over the last decade and a half to a point where a number of challenges are threatening reliable operation of these facilities” states a report from the City of Windhoek Department of Infrastructure, Water and Technical Services.
The preferred operations are the other half of the facilities that are technologically more advanced. These are operated by private entities such as the New Goreangab Reclamation Plant that produces potable water, the Ujams Waste Water Treatment Plant that treats industrial effluent and the Elisenheim Waste Water Treatment Plant that treats domestic sewage.
According to the Council the restructuring of functions within the Municipality would mean that existing financing structures will be scrapped for a rational financing structure capable of tapping into the vast resources of capital markets.