By Petronella Sibeene
Managing Director of the national power utility, Paulinus Shilamba, yesterday revealed that NamPower is running two standby power stations – diesel-fired Paratus and coal-powered Van Eck Power Station – at a loss.
Fear is that NamPower might not be able to sustain its operations in the long run, as a result of these two loss-making standby power stations.
Shilamba, who yesterday briefed the Standing Committee on Economics, Natural Resources and Public Administration about the status of energy in the country, explained that since July last year, the Van Eck and Paratus power stations have been running regularly at high cost due to reduced imports of electricity from South Africa’s Eskom.
The average cost of generation and importation since July 1 this year is 36 cents per kilowatt per hour and yet generation tariff as approved by the Electricity Control Board (ECB) is 27 cents per kilowatt per hour. This translates into a loss of 10 cents per kilowatt per hour.
“Under these circumstances, NamPower will not be able to sustain its operations and fulfil its mandate,” Shilamba said.
Van Eck Power Station supplies the country with 120 megawatts and it costs N$1 million to run it for a period of 24 hours. Paratus on the other hand generates 24 megawatts.
The two power stations were supposed to be standby plants but given the critical shortage of electricity in the country and the SADC region, the two stations have since last year been running regularly to offset the power deficit.
Shilamba says the situation can only be reversed through higher electricity tariffs, which for the past 20 years have been unattractive. This has led to the lack of investor interest to venture into power generation in Namibia.
The power utility will also need a cash injection from the Government as well as improved electricity tariffs towards cost reflectivity.
In the wake of severe power shortages, NamPower says it is managing the situation quite well and evident is the fact that most Namibian power consumers have not really felt load shedding.
Shilamba said the three measures namely, the operation of standby power generation stations, application of demand side management (DMS) and the installation of an emergency diesel generator are the reasons for minimised load shedding in Namibia.
In the next six to seven months, NamPower is likely to put up a diesel generation plant near Paratus.
The 50-megawatt generator to be built at a cost of N$600 million will help cushion the critical “power quagmire” Namibia finds itself in.
NamPower will cover 40 percent of the required capital amount.
Another power station with a capacity of 100 megawatts is earmarked for the coast within the next 12 to 18 months.
The two projects to be considered in the medium term have high capital and operational costs, thus the options to be developed will be in investment partnership with the mining community and other larger customers, Shilamba said.
Overall, NamPower will have to spend about N$10 billion in the next five years to ensure sufficient electricity supply in the country.
Capital injection from Government stands at N$1 billion while NamPower has N$2 billion from its cash reserves and has a deficit of N$6.25 billion.
According to Shilamba, the company through its dual listing of N$3 billion has so far raised N$500 million. It is hoped that by 2013, NamPower would have raised N$1.5 billion.
The managing director said NamPower could only guarantee electricity security by 2009 when supply would have improved significantly.
Self-sufficiency, as Government demands, can only be attained four to five years from now, Shilamba said.