Fitch Ratings has affirmed Namibia Water Corporation (NamWater) Limited’s long‑term foreign‑ and local‑currency issuer default ratings at BB‑ with a stable outlook.
According to the report, despite operating in a subdued economic environment, NamWater’s Standalone Credit Profile remains at BB‑, underpinned by N$1.9 billion in cash and equivalents at end‑2024 and zero gross debt following the repayment of its April 2022 bond. Fitch expects the company to maintain a moderately positive net cash position through 2028, even as capital expenditure climbs and free cash flow turns negative over 2025-2028.
“Fitch Ratings has affirmed Namibia Water Corporation Limited’s (NamWater) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘BB-‘. The Outlooks are Stable. The rating affirmation mainly reflects continuing strong links between NamWater and Namibia (BB-/Stable) under our Government-Related Entities Rating Criteria (GRE Criteria),” the report read.
It is further reported that five years of flat tariffs (aside from the mining sector), have constrained Fitch’s forecast EBITDA margin to 5.1% in 2025, down from 16.1% in 2023, and contributed to negative free cash flow of an estimated N$1.68 billion over 2025-2029. Collection delays, particularly from local authorities, are expected to absorb N$575 million in working capital through 2029.
Fitch notes that while NamWater has submitted a proposed tariff increase for 2026, it has not been factored into the rating case. Should tariffs rise as under consideration, profitability and cash flows would improve. Fitch also highlights NamWater’s history of state support, including grants and government‑guaranteed loans, and deems further assistance “extremely likely” if needed.
“NamWater has a monopoly position in Namibia, with no close substitutes available. Our assessment of ‘Strong’ contagion risk reflects our view that a NamWater default could affect the availability and funding cost of the sovereign and/or other GREs,” it is reported.
Looking ahead, Fitch’s key assumptions include flat tariffs in 2025-2026 before modest annual increases, a temporary dip in volumes in 2025 followed by recovery, and N$2.8 billion in total capex through 2029 funded by a mix of internal cash and new debt. Any significant deviation, such as a faster cash drawdown or higher borrowing, could trigger a review of NamWater’s credit profile.
