COUNCIL APPROVES R30 MILLION LOAN
The Town Council at its monthly meeting on 29 September 2011 gave approval to the Municipality to take up a loan of R30 million for the partial financing of the seawater desalination plant that was completed in September 2011 at a cost of R210 million.
Tenders were invited, and it appeared that a loan over 15 years would be the most favourable. It will initially be taken up at a floating rate of 2,8% above the Jibar rate, with the option, at the discretion of the Municipal Manager, to change this eventually to a fixed rate of 2,3% above the R186 bond rate should the latter option prove to be more beneficial to the Municipality.
Based on the R186 bond rate as at 15 August 2011, the total annual interest and redemption will amount to R4 064 604. The amount for the current financial year will depend on the date at which the loan is taken up and if the full loan will be taken up at that stage.
The Municipality already announced in June 2010 that Council had decided in principle to borrow up to R100 million to finance the project. The National Treasury and PetroSA in the meantime contributed R92 million and R80 million respectively to the total project cost of R210 million.
Although a seawater desalination plant has been envisaged in the longer term to supplement the Municipality’s water sources as well as to keep pace with development requirements, the Eden District, in which Mossel Bay is situated, was in November 2009 declared a disaster area because of the worst drought in 132 years since records are kept.
When construction of the project commenced in June 2010, the estimates were that the Wolwedans Dam, Mossel Bay’s main source of water, would run dry in October 2010. The prognosis was also that the drought could continue for several more years.
Sufficient rain since October 2010 has resulted in all Mossel Bay’s dams being virtually full at the moment.
Several options for the operation of the plant, with due cognisance of the cost factors, are being considered at present. One is to operate the plant at its full capacity of 15 megalitres a day, while another is to operate it at a minimum rate of 2,5 megalitres a day. Another is to mothball it until it is required depending on the town’s water demand. The latter is, however, an expensive option for a plant of this size.
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