Fitch release on Berg Water Project

Fitch Ratings has affirmed Berg Water Project’s (BWP) National Long-term ‘AA’ and Short-term ‘F1’ ratings.

BWP entails the construction of a water-storage dam on the Berg River, outside Franschhoek in South Africa’s Western Cape Province. BWP, scheduled for completion by December 2007, will augment the City of Cape Town’s (CCT) water supply by some 18 per cent.Water demand studies undertaken in the Western Cape show that growing consumption by the city will begin to exceed yields from existing sources before the end of this decade.The government responded in 2003 by appointing TCTA, a state-owned specialised liability management body, to implement and fund BWP.Fitch assigned the above National ratings to BWP in July 2004 based on the project’s ability to repay debt from the sale of water and on the credit profiles of the parties involved.Importantly, the government’s Water Affairs and Forestry Department plays an integral role in the supply and payment agreements and provides a large measure of support to the rating, based on the terms of the implementation agreement with TCTA.In terms of project cost, the revised estimate at November 2006 is N$1,552 million, still within 10 per cent of the original estimate of N$1,448m.The Berg Water tariff was based on a project cost of about N$1,877m, but the latter was reduced after design changes in the dam wall were approved.Nampa-ReutersBWP, scheduled for completion by December 2007, will augment the City of Cape Town’s (CCT) water supply by some 18 per cent.Water demand studies undertaken in the Western Cape show that growing consumption by the city will begin to exceed yields from existing sources before the end of this decade.The government responded in 2003 by appointing TCTA, a state-owned specialised liability management body, to implement and fund BWP.Fitch assigned the above National ratings to BWP in July 2004 based on the project’s ability to repay debt from the sale of water and on the credit profiles of the parties involved.Importantly, the government’s Water Affairs and Forestry Department plays an integral role in the supply and payment agreements and provides a large measure of support to the rating, based on the terms of the implementation agreement with TCTA.In terms of project cost, the revised estimate at November 2006 is N$1,552 million, still within 10 per cent of the original estimate of N$1,448m.The Berg Water tariff was based on a project cost of about N$1,877m, but the latter was reduced after design changes in the dam wall were approved.Nampa-Reuters