The Badirammogo Water User Association (BWUA) on Tuesday said that it has passed a significant financing milestone for one of South Africa’s largest water infrastructure programmes.

Stage 1 of the R25-billion Olifants River Management Model (OMM) Programme has achieved financial close with its mezzanine debt lender, climate-focused blended finance investment manager Climate Fund Managers.

The funding milestone through Climate Fund Managers European Union-supported water, waste and oceans infrastructure fund Climate Investor Two facility, which approved a $86.2-million, or about R1.4-billion, financing facility to support the first stage of the OMM Programme, represents the conclusion of the principal funding, legal and commercial arrangements associated with Climate Fund Manager’s mezzanine debt investment.

The milestone followed the successful commercial close of Stage 1 in December and the start of the detail design, limited procurement and construction in February.

"Achieving mezzanine debt financial close is a significant milestone for the OMM Programme and demonstrates how blended finance can continue to support the delivery of strategic infrastructure at scale," said Climate Fund Managers Africa regional head Darron Johnson.

"Through Climate Investor Two, Climate Fund Managers is proud to be collaborating with BWUA, government stakeholders and funding partners on a programme that addresses long-standing water security challenges in a region of significant economic importance."

"The achievement of mezzanine debt financial close represents another significant step forward for the OMM Programme and demonstrates the confidence that our funding partners have in the project's vision, governance model and long-term impact," added BWUA CEO Dr Kobus van Duvenhage.

"We are deeply appreciative of the confidence shown by Climate Fund Managers in reaching this milestone, which further validates both the strength of the project and the effectiveness of our blended-finance approach."

The principal mezzanine debt lending arrangements for Stage 1, which will support the programme’s implementation, build on the foundational support of Infrastructure Finance and Implementation Support Agency (IFISA) and the Department of Water and Sanitation (DWS) and enable mezzanine debt lending and grant funding streams to progress in parallel.

The foundational support, early participation and ongoing commitment by IFISA and the DWS, helped establish the OMM Programme’s bankability and enabled the successful mobilisation of private capital.

PROJECT SPECS

The OMM Programme is a multi-stage, source-to-tap water infrastructure development programme and a pioneering 50:50 public-private collaboration between government and the private sector.

Registered as Strategic Integrated Project 19, the programme is designed to accelerate the expansion of bulk raw and potable water infrastructure across the northern and eastern limbs of the Bushveld Igneous Complex in Limpopo.

The R8.5-billion Stage 1 of the OMM Programme comprises critical bulk raw water pipelines, pump stations, associated water treatment infrastructure and supporting energy solutions. It forms part of the broader six-stage programme that will progressively expand water infrastructure across Limpopo.

Once fully implemented, the OMM Programme will include more than 875 km of bulk raw and potable water infrastructure and is expected to provide potable water to about 140 communities, benefit an estimated 390 000 people, strengthen water security for municipalities, communities, mining operations and industrial users, support regional economic growth and climate resilience and create an estimated 42 000 direct, indirect and induced employment opportunities.

Climate Fund Managers’ commitment further validates the bankability of the OMM Programme and demonstrates continued confidence from both institutional and private-sector funding partners in the programme’s long-term sustainability and impact.

It also strengthens the programme’s position as it progresses toward full senior lender financial close with the appointed consortium of commercial banks comprising Absa, Nedbank and Standard Bank.

"This milestone further strengthens our ability to deliver transformative water infrastructure that will benefit communities, municipalities and industry alike. We now turn our attention to achieving financial close with our senior lenders and maintaining implementation momentum, " said Van Duvenhage.

The collaboration model underpinning the OMM Programme demonstrates how government institutions, development finance partners, commercial lenders, industry stakeholders and private investors can work together to accelerate the delivery of strategic national infrastructure.