KAMPALA – Global Credit Ratings (GCR) has assigned the National Water and Sewerage Corporation (NWSC) a long-term national scale issuer rating of AA (UG), which implies that NWSC has very high creditworthiness and is able to utilize the funds it receives for the specific purpose.
Global Credit Ratings accorded the above credit ratings to NWSC based on sustained robust operating performance, which has seen connections rise by 40% over the FY13 to FY18 review period and water production increase by 50%.
Mr Samuel Apedel the head of Public Relations at NWSC, said the rating implies the corporation is a trustworthy institution which donors can give money which will be paid back and the money will be used for the purpose it was borrowed in a transparent manner.
“The rating is like a credit card used in banks which tracks what you do with the money you borrow and your repayment patterns such that when you go to borrow money, the bank can easily tell whether you are trustworthy or not,” he said in an interview at the weekend.
“Our finances are managed efficiently and whatever we earn, we plough it back to extend services to the people and today we are in 240 towns and urban growth centres compared to the 23 where we were in 2013,” he added.
Since 2013 when a new board took over the oversight function of the corporation, NWSC has experienced tremendous expansions due to the strategic plan that the management and the board put in place. This has seen the corporation expand its footprint from 23 towns where it stagnated since inception till 2013, to 240 today.
Mr Apedel said the strategic plan focused on geographical expansion, stakeholder engagement, customer delight and proper asset management.
Established by an Act of Parliament in 1972, NWSC is probably the only government-owned institution running a profitable business after many were privatized.
He said the rating shows debt utilization at NWSC has been limited and that NWSC has settled all obligations on time and in full, establishing a positive debt servicing track record.
The Corporation only maintains an overdraft facility, but access to funding is likely to be forthcoming from local financial service firms. More significantly, NWSC enjoys substantial access to grant funding from a wide range of development institutions and donors. The Corporation is in constant contact with these organisations to ensure that funding is available for projects when needed, but the lack of secured funding facilities or contractual commitments does weaken GCR’s assessment of liquidity.
Although the substantial capex in the pipeline implies project delivery risk, NWSC has demonstrated a strong ability to bring large capex projects to fruition. The negotiation and maintenance of substantial secured funding commitments from a wide range of financial institutions would support financial stability and could lead to positive ratings movement.
Continued strong service delivery and growth in earnings, could also support rating progression. Conversely, project delays, particularly if funded with debt, could result in some debt service pressure. Perceived reduction in support from the Government of Uganda and/or development institutions could also result in negative rating action.