New Electricity Distributor Planned

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By Wezi Tjaronda WINDHOEK ELECTRICITY consumers of Windhoek, Okahandja and Gobabis are gearing themselves for a new service provider come July 1, 2006. A new electricity distribution company, CentralRED will take over the distribution of electricity, a function that was carried out by regional authorities, local authorities and NamPower. The establishment of Regional Electricity Distributors (REDs) throughout Namibia is geared towards assisting especially smaller struggling municipalities in the country, through which they stand to benefit from the shared technical support, capacity building as well as the much needed revenue to keep afloat. In an effort to ensure a sustainable and efficient electricity distribution industry in Namibia, Government together with the Electricity Control Board (ECB) have established REDs, some of which are already operational. NORED was the first one to start its operations on March 13, 2002, followed by ErongoRED on August1, 2005 and CENORED on October 1, 2005. This development comes in light of the Ministry of Mines and Energy’s approval of the Electricity Supply Industry (ESI) restructuring study from 1998 to 2000. NORED covers the four northern regions and Caprivi and Kavango, CENORED covers Tsumeb and Otjiwarongo, Grootfontein and Khorixas, ErongoRED the coastal areas, SORED the southern part of Namibia and CentralRED covers Windhoek, halfway between Otjiwarongo and Okahandja up to halfway to Rehoboth and from about 150 km west of Windhoek up to the border with Botswana. CentralRED and SORED are however expected to start their operations by July 2006, after which, electricity consumers will be billed by the companies. REDs were also meant to sufficiently address the current problems of the close to 50 individual distributors in the country, which partly led to the diverse financial performance of the multitude of electricity distributors. It was also observed that the distributors failed to raise sufficient capital or big investments for self-sufficiency, prompting Government and the relevant authority groups to look at establishing the REDs. The City of Windhoek, which was all along responsible for the distribution of electricity in Windhoek, will be the responsibility of CentralRED. A press release from the Windhoek City Council says that the effect of the new company will be to improve service delivery in areas that could previously not afford the level of expertise that the larger centres can offer. Although this arrangement will lower the income of local authorities, which were distributing electricity, the losses will be recovered from surcharges on the new RED companies. The city also allayed fears that the new arrangement may lead to an increase in the tariffs, as the companies will only be allowed to make a predefined profit as per government directive. Although every RED has its own tariff structure, an official from the Electricity Control Board says that this move has not resulted in an increase in electricity tariffs. The only difference is that now there are high basic charges and small unit charges, which is the opposite of the previous arrangement. In its initial stages, the operations of the CentralRED will not differ from the current set-up as the current meter reader force, billing system, and account production facilities of the City of Windhoek will still be used until the new company has set itself up and streamlined its operations. Like Windhoek, Okahandja and Gobabis municipalities will also handle the operational issues of CentralRED until alternative measures are put in place after July.