City’s R1.3bn wastewater deal

Responses were received from both local and international banks and KfW proved to have the best rate

THE City will next week sign a loan agreement with Germany’s KfW Development Bank for urban wastewater management which will be payable at a favourable rate over 15 years.

The loan is in line with the City’s focus on the upgrading of urban wastewater management facilities and the diversification of Cape Town’s future water mix, and is an integral part of German-South African co-operation to mitigate the effects of climate change and contribute to water resilience.

The signing will coincide with a state visit next week by German Federal President Frank-Walter Steinmeier to South Africa.

Steinmeier will hold talks with President Cyril Ramaphosa in Cape Town after an economic round-table discussion with Minister of Trade and Industry Rob Davies and German business representatives.

It was reported that the City wanted to borrow R4 billion over the next three years to fund its capital projects.

One of the loans the City reportedly wanted approved was an €80 million (R1.3billion) loan from the German government-owned KfW Development Bank.

In a statement last month, the City said it had chosen to obtain funding from KfW Development Bank after it was approached by this institution and a funding offer was submitted to the City at a highly subsidised interest rate.

“The City then advertised a Request for Funding Proposal to compare this offer to the market.

“Responses were received from both local and international banks and KfW proved to have the best rate compared to the proposals received, being 2% lower than the local market rates.

‘‘The rand amount of the unsecured loan would be fixed upfront and repaid over the term of the loan, which is 15 years,” read the statement.