We’re Short of Energy

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By Wezi Tjaronda WINDHOEK Shortage of electricity remains a prohibitive factor towards investments in energy-intensive businesses in Namibia, a senior energy official has said. Although the country is known for its good infrastructure, good corporate governance and political stability, a shortage of energy remains a problem. Reiner Jagau, NamPower’s Chief Technical Advisor, said this week that some people who want to invest in energy-intensive businesses have approached the power utility for energy that the utility cannot supply. He said there was an opportunity from some smeltering businesses interested in investing in the country, but if Namibia can only produce 500 MW of electricity, how could it supply 1 000 MW. “Everything is available, except electricity,” he said, citing smelters which spend 30 percent of their capital on electricity and 60 percent on raw materials. Jagau, when he spoke at the Namibia Manufacturers’ Association (NMA) meeting in Windhoek on Tuesday, said that Namibia, which imports more than half of its electricity needs from South Africa, Zambia, Zimbabwe and Mozambique, needs 6 percent growth rate in electricity for it to meet the goals stipulated in Vision 2030. Electricity shortages being experienced in Namibia at the moment are also a SADC problem, which Jagau said are preventing the growth of businesses. “We are a net importer of electricity which puts our security of supply at risk,” said the technical advisor. With the current situation where the country’s demands amount to what it cannot supply, it is projected that next year’s demands will surpass supply, making it a very challenging year. At present, energy consumption has increased, while energy reserves are diminishing. Among alternatives that the power utility is looking at for energy security are the Baynes project, which will go into a full feasibility study, the Kudu gas project, Popa falls, the Orange River, as well as renewable energy. However, NamPower still has to find a sustainable price for the gas from the Kudu project, Popa has some environmental concerns, there are border worries over the Orange River which are yet to be resolved, while renewable energy would not solve Namibia’s long-term needs, he said. At present, NamPower is also looking into the possibility of operating an open cycle gas turbine at Walvis Bay to generate some 22 MW of electricity. If this proves to be feasible, the turbine may be operational by May 2007. The NMA has taken issue with the high rates that manufacturers in Namibia pay for electricity compared to their counterparts in South Africa, which the association said disadvantaged local manufacturers. An Electricity Comparison Report compiled at the request of the association indicates that manufacturers here pay 60 to 70 percent more for electricity in Namibia than in South Africa. The basic problem with electricity prices in Namibia rests with the NamPower tariffs, which are much higher than RSA bulk tariffs. The report found that this pushes up all other tariffs since all distributors in Namibia purchase from NamPower. “Local authorities in Namibia take much higher mark-ups on electricity than their RSA counterparts – in monetary terms roughly between 9c/kWh and 20c/kWh more than in the RSA,” the report added. Other studies have shown that probably all of these additional mark-ups go into cross-subsidizing other municipal services. This accounts for the other half of the price premium paid in Namibia compared to RSA. Some local authorities in Namibia make high profits, which makes it difficult for large consumers to settle in their areas, the report added. The report recommended that the NMA lobby electricity distributors to give recognition to large consumers with high load factors, which should be expressed in the form of tariff incentives for such consumers. This could take the form of a rebate on demand or energy charges triggered by reaching a specified minimum load factor in a given month or other period.