By Wezi Tjaronda
The Electricity Control Board (ECB) has issued five special conditional generation licences to independent power producers.
The licences are: one for a mini hydropower on the Orange River, two for large coal power production in Walvis Bay, one for electricity production from wind and another for production of power from waste oil, also at Walvis Bay.
NamPower is a partner in the wind power project, which involves a French investment partner.
The utility’s Chief Executive Officer, Paulinus Shilamba, said his company was negotiating a partnership agreement and was about to finalise a memorandum of understanding, after which the full feasibility study will be conducted before implementation.
The utility is also negotiating a power purchase agreement with another independent power producer to buy its electricity while it has also been approached by yet another, which has not yet applied for a licence.
These licensees are given two to three years during which they should have carried out the full feasibility study, completed the environmental impact assessment as well as negotiated the power purchase agreement, without which the licence lapses.
ECB’s Manager: Regulatory Support Services, Gerrit Clarke, last week said the special licences were issued to stimulate investment in electricity production, which has been hampered by low domestic electricity prices, foreign exchange risks and market power.
Clarke said the low domestic electricity prices cannot attract any investment.
Although approved tariffs of electricity are 30.6 cents per KW hour, power generated from renewable and other sources such as gas turbines and diesel are more expensive. Power generated from the coal fired Van Eck station costs N$1 per KWH while that from the gas and diesel turbines costs N$2 per KWH.
Shilamba said selling this electricity at 30 cents per KWH was not cost-effective.
“With the problems we are facing, time has run out for low prices in the region. Prices have to go up, otherwise nobody will be prepared to invest money they cannot recover,” he said.
Namibia’s dilemma is to find the least cost option to provide 200 MW of electricity in the shortest possible time. Although the fastest at present is diesel or gas, they are expensive.
Clarke added that the domination of electricity market by utilities in the southern African region had also led to a situation where there is no private sector participation.
Meanwhile, the ECB has tightened licence requirements. Independent power producers are now required to conduct a pre-feasibility study proving the financial and technical viability, secured land rights and to have proposed off takers of electricity who are prepared to negotiate a power purchase agreement on the preliminary proposed price.