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Namibia: Windhoek Maintains Ramatex a 'Blessing in Disguise'

Friday, 01 April 2005

Source: The Namibian (Windhoek)

The Windhoek City Council is attempting to smooth over reports that it overspent on its budget to provide the Ramatex Textile Factory with electricity.

In an agenda item titled 'Ramatex - Electricity A Success' the City Council said at its monthly meeting on Wednesday that the public needed to know that the electricity installation at Ramatex had been done "well below budget cost and that the installation not only benefited Ramatex but also the city as a whole".

A month earlier, the Council approved electricity infrastructure over-expenditure of N$9,2 million for the 2003-04 financial year.

Its documents indicate that almost half of this amount was for the Ramatex factory.

NamibiaBut, according to the Chairperson of the Management Committee, Bjorn von Finckenstein, the city had saved on the infrastructure developments it had provided to the factory since 2001.

He told the council meeting that this infrastructure was not only for the factory's use, but also benefited the Haloid and Otjomuise areas, where the factory is located.

"Although reference is made only to Ramatex, it was also necessary to upgrade the electrical network for Haloid and Otjomuise as indicated in the Electrical Master Plan.

Therefore, it was not necessary to budget extra, as the Ramatex Project was already providing for these needs required by Town Planning," notes the agenda item.

The council was provided with a barrage of figures from the municipality's electricity department at Wednesday night's meeting, which revealed that when work on the infrastructure for Ramatex began in 2001, the city budgeted around N$29,6 million for electricity provision.

To date it has spent around N$27 million on the electricity infrastructure.

With all invoices paid and the outstanding electricity work for Phase II considered, reported savings on this item have been calculated at N$2,3 million.

At the meeting the council was also told that according to an agreement with the city, Government was expected to foot the bill of half the costs incurred in providing infrastructure to Ramatex.

But The Namibian has learned that of the N$87,2 million the city has spent to date on developing infrastructure for the Ramatex concern, only about N$19,8 million had been received from Government.

With the first phase of the developments having totalled around N$58 million, it means that the amount the city has received from Government to date, has not even covered its half share of this first phase of developments.

The Namibian understands that the City of Windhoek and Government were expected to enter into a new payment agreement for the second phase of developments, which started three years ago, but that this has not yet happened.

The Management Committee is currently awaiting a report from the Department of Planning, Urbanisation and Environment that is expected to highlight the full expenditure costs of the Ramatex project.

Three years ago, the City Council approved estimated expenditure of N$26,1 million for developments under Phase II, which included providing infrastructure for Ramatex subsidiaries Tai Wah and Rhino Garments and the planned expansion of Ramatex itself.

In its efforts to highlight the positives, the council also noted that since Ramatex began operations, the city's income for electricity supply had more than doubled.

This is despite the factory receiving electricity at a reduced cost until the end of 2005.

The city expects income of N$100 million at the end of the 2004/05 financial year from electricity sales.

The benefits Ramatex has received from the City of Windhoek to date include the lease of 43 hectares of land (valued at N$16,9 million) at no cost for 99 years, an access road valued at N$1,5 million, subsidised electricity and free infrastructure estimated at around N$27 million, subsidised water supply until last year, water infrastructure originally estimated to cost N$39 million, and additions to the sewerage system estimated at N$17,3 million.

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