Namibia: Finance Prefers Chinese Loan for Airport

Calle Schlettwein

The finance ministry has rejected ministerial advice against using a Chinese loan estimated to be worth over N$3 billion to upgrade the Hosea Kutako International Airport.

The Namibian understands that public enterprises minister Leon Jooste advised finance minister Calle Schlettwein at the end of last year to opt for a public-private partnership arrangement as advised by the World Bank.

A public-private partnership is an agreement between the government and a private investor who, in this case, could upgrade the airport at their own cost, and manage it for several years to recoup their money.

Schlettwein confirmed to The Namibian yesterday that his ministry is leaning towards funding the airport upgrades by getting a loan, instead of allowing a private company to build the airport.

“A public-private partnership will result in outsourcing the airport. Do we want to outsource our strategic asset to private companies? No,” he said, adding that the state needs to be in charge.

Schlettwein’s latest comments are the clearest indication that the government is hell-bent on taking out a loan from China to fund the airport upgrade.

Schlettwein insisted that another reason why the government is opting for a concessional loan is because borrowing for a public-private partnership deal will be done based on commercial terms, unlike a loan from China that has better conditions such as favourable repayments, grace periods, and is cheaper.

He said Namibia has an opportunity to get a concessional loan from countries like China, which he believes is a better option. According to him, the government is still waiting for a feasibility study to provide them with the estimated costs of the airport upgrade.

The government will then take those figures to China to motivate for the loan worth more than N$3 billion.

The World Bank has advised the government to look for a private partner investor to manage the Hosea Kutako International Airport to avoid using taxpayers’ money for costly airport upgrades.

In a confidential report dated 24 April 2018 directed to the finance ministry, the World Bank estimated that the government could spend anything between N$2,7 billion and N$5 billion (including an expensive runway) to upgrade the airport.

Jooste was unreachable for comment.

The World Bank report titled ‘Assessment of Potential Financing and Investment Options to Implement the Envisaged Expansion of the Hosea Kutako International Airport’, said partnering with private investors is an attractive and feasible option.

“A public-private partnership would allow for the required development and enhancement of the Hosea Kutako International Airport’s infrastructure, while generating budget efficiencies and fiscal relief for the government to sustain the rest of the airport network,” the report stated.

The airport contract has been described by some top officials as too big to fail because of allegations that several senior state officials were paid over N$100 million in bribes.

The bribes, sources said at the time, were paid before the N$7 billion airport contract was awarded in 2015. The contract was later declared illegal, but it remains a thorn in the government’s side.

Schlettwein has in the past said that the government would not want to spend on an airport if there was a need for spending on other public services.

Schlettwein’s comments about shutting the door against giving the airport to a private company satisfy the concerns by the National Union of Namibian Workers (NUNW), who complained in 2017 about this plan.

The union rejected the plan by the government to place the Hosea Kutako International Airport into private hands.

“We demand that our government, with immediate effect, withdraws such ill-considered advice and the sinful public-private partnership legislation, failure of which it shall risk facing unspecified consequences from Namibian workers,” the NUNW said.

Read the original article on Namibian.