By Petronella Sibeene
NamPower last Friday said it is seeking a loan of N$123.2 million (US$16 million) to recapitalise the Hwange Colliery Company Limited, a mine that supplies coal to Hwange Power Station from where it imports 40 megawatts of power.
The money would be used to rehabilitate the coalmine so that its coal output to Hwange Power Station would be increased.
Last year, NamPower and Zimbabwe Electricity Supply Authority (Zesa) Holdings signed a US$40 million (N$290 million) Power Purchase Agreement to be used for the resuscitation of four units at Hwange Power Station.
The agreement entailed that Namibia receives 150 megawatts from the coal-fired Hwange Power Station after all the rehabilitation work is complete.
Managing Director of NamPower, Paulinus Shilamba, in an interview with New Era said for Hwange Power station to supply power constantly to Namibia, there is a need for a sustainable supply of coal.
“For the station to function, it needs constant supply of fuel that comes from the colliery,” he stressed.
Hwange Colliery mines and processes coal with 72 percent of the coal going directly towards the generation of electricity at the Hwange Power Station.
Shilamba said NamPower and the colliery saw the need for such an investment.
Last year NamPower contracted a German consultant to assess the needs at the colliery and make recommendations on areas that need possible recapitalisation, Shilamba added.
Shilamba said NamPower being in the business of supplying electricity and not fuel looked for a partner to work jointly with the Hwange Colliery.
Through the Namibia Chamber of Commerce and Industry (NCCI), four Namibian businesses were recommended to Hwange Colliery for joint business.
One of the four businesses was chosen and will, with the backing of Nedbank Namibia, invest the US$16 million in the Hwange Colliery.
Based on the assessment carried out by the consultant, there is need to replace and repair some of the equipment at the coal mining and processing plant.
“The US$16 million is needed right away. We appreciate the involvement of the private sector in such ventures,” Shilamba said.
Since January, Namibia receives 40 megawatts from Hwange power station daily in accordance with the power purchase agreement.
The agreement says NamPower would import 150 megawatts for a period of five years from the Hwange Power Station that has a generation capacity of 480 megawatts. NamPower is responsible for funding equipment procurement and labour costs for Hwange Power Station, while Zesa caters for local costs.
With 40 megawatts already flowing from the power station to Namibia, Shilamba said another 40 megawatts are expected next month.
In addition to the US$40 million loan to Zimbabwe for revamping the power station, NamPower in December announced that it would have to fork out an additional US$10 million for the same project.
Additional funding was found necessary after an inspection of the four units to be revamped at the aging power station.
But the NamPower Managing Director says the US$10 million has not yet been released, as the funds might not be required immediately.
Should NamPower release the US$10 million, the utility will negotiate for extra 30 to 35 megawatts, NamPower earlier said.
Electricity remains scarce in the Southern African Development Community (SADC) with many countries scrambling to secure permanent electricity supplies.
Due to decades of under-investment in the energy sector, most, if not all, SADC countries have found themselves at the receiving end of a biting energy crisis, which is threatening to derail years of solid economic growth.
Last week, energy ministers in the region met in the Democratic Republic of Congo to assess progress made in implementing major and promising projects that will solve the current power crunch.
The power shortages have seen electricity tariffs going up and some power utilities in the region succumbing to load-shedding.
The current regional power crisis was predicted in 2005 and a SADC conference in Windhoek identified potential electricity projects and ways to address the pressing electricity deficit in the region.
The roadmap developed by the Southern African Power Pool shows that the energy problem would be overcome by 2010 and by 2013 the region will enjoy adequate energy resources including a 10 percent reserve margin.
The electricity deficit has been attributed to lack of investment in the energy industry in the past years. Investors found the industry unattractive due to low tariffs where investors were unlikely to yield or recover their capital.