Fitch holds NamWater amid debt and tariff woes

Fitch Ratings has affirmed Namibia Water Corporation's long-term issuer default ratings at 'BB-' with a Stable Outlook, anchoring the state-owned utility's creditworthiness to its strong ties with the Namibian government and its position as the country's sole bulk water supplier.

The rating matches NamWater's Standalone Credit Profile of 'bb-', which Fitch said reflects a conservative capital structure carrying no gross debt. Cash and short-term liquid investments are projected at N$2.1 billion at the end of the 2026 financial year.

Behind the stable headline, however, the agency identified two deepening pressure points: a six-year tariff freeze and a worsening debt collection crisis.

Trade receivables are projected to reach N$3.1 billion at the end of the current financial year, rising further to N$3.7 billion a year later. Local authorities account for 49% of outstanding balances and individual customers for 41%. Fitch said it has taken a conservative approach to its forecasts, assuming cumulative working-capital-related cash outflows of about N$448 million between 2026 and 2030, despite ongoing collection efforts and discussions with government ministries on possible remedial measures. The agency offered no indication that a breakthrough was imminent.

On tariffs, Fitch said rates have remained unchanged for six years, except for mining customers, pushing earnings before interest, tax, depreciation and amortisation (EBITDA) to negative N$244 million in the 2025 financial year. The agency projects cumulative negative free cash flow of approximately N$682 million between 2026 and 2030, with EBITDA margins expected to remain in the low single digits throughout the period.

NamWater has submitted a tariff revision request for the 2027 financial year, currently under consideration by the relevant ministries. Fitch said its base case, however, assumes tariffs remain frozen in 2027, with annual increases of 5% from 2028 onwards.

Capital expenditure is expected to total N$1.6 billion over 2026 to 2030, funded through internal cash balances, government grants and new borrowings. Government-funded development projects are excluded from that figure, as Fitch expects them to be fully matched by grants.

The corporation holds no gross debt following the repayment of its April 2022 bond. As at the end of February 2026, it held cash and cash equivalents of approximately N$904 million alongside N$1.098 billion in short-term investments.

Fitch assessed NamWater's decision-making and government oversight as "very strong" and its precedent of state support as "strong", resulting in the utility's rating being equalised with Namibia's 'BB-' sovereign rating. Any change to the sovereign rating would trigger a corresponding move for NamWater.