News from the OPM

Making NWC Financially Stronger Allows More Capital Projects – PM Holness

Making NWC Financially Stronger Allows More Capital Projects – PM Holness
Prime Minister Andrew Holness (Centre) with Mark Barnett, President, NWC (Left) Steven Gooden, CEO, NCB Capital Markets (2nd right) & Audrey Sewell, Permanent Secretary, Ministry of Economic Growth & Job Creation (Far right)

Prime Minister Andrew Holness says greater investment in the National Water Commission (NWC) will set the stage for its listing on the stock market.

The Prime Minister was speaking this morning (May 15) at a press conference to announce the NWC’s successful J$15 Billion Bond Issue.

Prime Minister Holness commended the team on the historic bond issue and said there are many assets that the government owns but is unaware of the value.

“$15 billion dollars is significant, it would be the largest that the NWC has ever done. It would be the second largest Jamaican dollar denominated transaction of this nature. It is done without a Government guarantee, a portion of it is done for 40 years,” said Prime Minister Holness.

He said with the bond issue the Government is now creating the NWC as an asset in which pension funds and other such funds like insurance funds can invest.

“There is a confusion out there when we talk about privatization of the NWC people believe we going to privatize water. I want you to take that out of the conversation and focus now on the NWC as a valuable asset that people can choose to invest their savings into because it generates a long term secure revenue stream and that is how we develop our economy. Making the NWC financially stronger, allows it to take on more capital projects. A significant part of this $15 billion will be to finance capital projects, lay pipes, do sewage, new water treatment and repairs,” stated Mr. Holness.

The Prime Minister noted that the NWC is now a viable asset that does not have to depend on government support.

He said the transaction sends a great signal to the market.

“The objective of the government is to have universal supply of water. That would mean that more than 90% of the Jamaican population is within a 100 metres of a supply main – that takes a lot of cash. It is not something that can be done wholly from the government’s resource. So we will have to be using creative methods like this and the creative method is not necessarily raising the financing but making the NWC a financially strong and sound asset that it can leverage that with the private sector to undertake these kinds of infrastructure development and that is the strategy that we are utilizing,” said The Prime Minister.

Under the arrangement NWC will have immediate access to J$12.51 Billion to refinance specific foreign currency denominated loans and also provide funding of J$3.0 Billion to undertake a number of agreed capital expenditure projects island wide in the fiscal period 2018-2019.

In the meantime, Prime Minister Holness indicated that the successful bond issue was realised because the Government is on a “financial diet”.
He said given the Government’s fiscal discipline there is more money for other players in the economy to invest.

The main objective of the local bond issuance is to allow the NWC re-finance a significant portion of its high interest rate foreign currency denominated loans.
The bond facility was arranged by the National Commercial Bank through competitive tender.