Desalinated water, bad debts bite NamWater

NamWater says rising water demand in Namibia’s coastal regions, particularly from the mining-intensive Erongo Region, contributed to increased costs that weighed on the utility’s financial performance during the 2024/25 financial year.

The bulk water supplier recorded a loss of N$128.3 million for the year, citing the cost of purchasing desalinated water, rising operating expenditure and increased provisions for doubtful debts as key factors behind the result.

NamWater reported strong revenue growth during the period, supported by increased water supply to mining operations in Erongo and institutional customers in the North West Region. Revenue increased to N$2.22 billion, compared with N$2.11 billion in the previous year.

However, profitability was affected by higher input costs, particularly the purchase of desalinated water supplied to coastal customers.

NamWater spent N$693.9 million on the purchase of desalinated water during the year, up from N$603.7 million in 2024.

The corporation said water demand in the Coastal Business Unit exceeded the volumes incorporated into approved tariffs. While government-approved tariffs accounted for 790 000 cubic metres of desalinated water supply for coastal towns, NamWater was required to purchase 2.3 million cubic metres due to inadequate groundwater sources and limitations in conveyance infrastructure.

“During the year under review, NamWater increased the desalinated water supply to the local authorities in the Business Unit Coastal, where water was supplied at a loss to the corporation,” NamWater said. 

NamWater operates on a full cost-recovery basis, with tariffs designed to cover the cost of water supplied and future infrastructure replacement. However, the corporation said regional differences between revenue generation and supply costs require cross-subsidisation between business units.

The Coastal and Central business units generated the largest share of revenue, while costs were highest in the Coastal and North Western business units. Credit losses were mainly experienced in the South and Central business units.

NamWater’s financial position was further affected by a sharp increase in expected credit losses, which more than doubled to N$536.7 million from N$182.5 million a year earlier.

The utility attributed this to deterioration in the quality of its debtors, reflecting both customers’ ability and willingness to pay, while noting continued pressure to maintain water services to consumers despite payment challenges.

The planned government intervention to finance the procurement of prepaid water meters for slow-paying local authorities has not yet commenced.

Despite the annual loss, NamWater remained solvent and liquid, reporting a current ratio of 6.59, up from 5.45 in the previous year, and maintained a debt-free position.