Erongo RED strikes N$280m deal with DBN

ERONGO RED and the Development Bank of Namibia (DBN) on Friday signed a N$280 million loan deal that will enable the electricity distributor to complete vital projects that will ensure the region’s electricity’s needs are met.

The agreement comes in the background of uncertainty regarding the availability of energy, and infrastructure capacity, in Southern Africa.

This is the first and largest loan to be advanced to Erongo RED since its inception in 2005. Erongo RED boasts of a positive track record: since 2005 its revenue has grown from N$183 million to N$785 million in 2013; and during this period, the company financed all capital projects from its own resources.

Erongo RED CEO Robert Kahimise said it was due to the magnitude and intensity of the projects that have to be implemented that the power distributor has for the first time sought external financing.

“We acted in accordance with all due processes when we were sourcing external financing and DBN emerged the successful tenderer,” said Kahimise.

The region’s economic activities have grown significantly and continue to do so, especially the mining, fishing and logistics industries, which in turn are attracting a large number of Namibians to the coast. All this has resulted in an increased demand for electricity, and Erongo RED needs to meet these demands to overcome constraints on the network, he said.

“The funds will enable us to accelerate implementation of our envisaged projects. Electricity supply is vital in stimulating and accelerating development, and a reliable supply and distribution of electricity remains and will continue to be an important component in boosting the economy of the region,” he said.

Critical projects include the Walvis Bay bulk upgrade (which is a work-in-progress and should be completed by next year); the Lithops intake sub-station near Arandis, which will see the upgrade to 33kV from NamPower to increase capacity for Arandis; and the strengthening of the supply capacity of Swakopmund’s electricity network.

DBN CEO Martin Inkumbi descriubed the loan as a “significant investment” in the development and prosperity of Namibia.

The loan will be paid back within 10 years at a prime rate interest, which is about 9,7%, the CEO told The Namibian.

“National development depends on an enabling environment in which enterprises can be established and thrive in a sustainable manner. Walvis Bay has a lot of potential and it is very crucial to our national economy. DBN’s mandate is to help fund economic activities in the country,” said Inkumbi.