Namport’s flawed N$20 billion plan

A critical report released this week shows that the plan to transform Walvis Bay into ‘the preferred regional logistics hub’ is very expensive, is based on deeply flawed growth projections, and should be revisited in light of the economic downturn.

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The new container terminal on reclaimed land is due to be commissioned in June. Photo Namport
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An aerial view of a section of Walvis Bay Port. Photo: Namport

The flaw in the plan

The economic data presented by Ritter point to serious miscalculations in the growth projections on which Namport’s plan for the new container terminal was based.

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The maximum capacity of the existing container terminal was never reached.
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Ritter says the projection for the loan and investment in the new container terminal were unrealistic.
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Namport employed 576 people in 2008 but by 2017 the number of employees had risen to 981. Photo Namport

Namport’s declining rate of profit

NamPort’s profitability is under pressure due to the drop in vessel visits and containers handled, as well as the massive investment in the new terminal. The debt burden for the new terminal would affect cash flow, meaning “a weaker balance sheet” in terms of Namport’s debt-to-equity ratio, Ritter said.

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High port costs and economic stagnation negatively impacted profitability, Ritter argued.
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A feeder port

Rainer’s view is that Walvis Bay is a feeder port rather than a hub port, as it is not situated on any major trade route, like Singapore. A hub port typically handles about 2 million containers per year, whereas Walvis Bay handles only around 200,000.

Spend wisely

Ritter argued that major upgrades, such as the Kransberg-Walvis railway line (N$5.5 billion), and the associated port, road and rail upgrades to the tune of some N$20 billion should be “accompanied by a professional cost/benefit analysis” or be set aside until the country’s fiscal position improves.

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Vessels docked in the Port of Walvis Bay. Photo Namport

Conclusion

The implication is clear. Based on overly optimistic and downright false growth projections — the Namibian authorities may have been hoodwinked into taking on massive debt commitments for port, rail and transport infrastructure expansion that may not be needed in the immediate future.

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