WINDHOEK – The national power utility NamPower has confirmed that Namibians can expect to fork out an average of 13 percent per annum more for electricity for at least the next five years or until the commissioning of the much anticipated Kudu gas-to-power project by the end of 2019.
“Following the delays over the past few months the (Kudu gas) project is now firmly back on track after the cabinet resolution last month to approve the government support package, which was also announced by the Minister of Finance in his budget speech late last month,” said NamPower’s Managing Director, Paulinus Shilamba, during a media briefing in the capital this week.
The support package includes the financing of the NamPower and Namcor obligations under the project (equity and infrastructure) and provision of guarantees for the project.
Shilamba revealed that following the approval of government’s support package the upstream and downstream project teams are now hard at work to review the commercial agreements in line with the provisions of the support package and to ensure that those agreements are concluded.
“As publicised in the media previously some of the key upstream partners have pulled out of the project, but the government and Namcor are hard at work and have assured us that substitute arrangements are being finalised and that this will not have an impact on the project timelines,” commented Shilamba. During his first tabled budget as Minister of Finance, Calle Schlettwein allocated close to N$5 billion over the Medium-Term Expenditure Framework (MTEF) to support both NamPower and the National Petroleum Corporation of Namibia (Namcor) for the Kudu gas-to-power project.
During this week’s briefing, Shilamba noted that the power supply shortage in the Southern African Development Community (SADC) region has forced most power utilities to implement demand side management (DSM) programmes, including load shedding.
“These measures have to some extent succeeded in restraining overall electricity consumption in those countries. Load shedding, however, has also had a negative impact on the socio-economic development in those countries, a situation that NamPower shall do its utmost to avoid,” pledged Shilamba.
The Nampower MD continued that in the long term there is hope that the regional and domestic power supply shortages will be alleviated when capital intensive power plants will be commissioned to enable the generation of sufficient capacity to meet and hopefully exceed future demand. According to the NamPower chief Namibia recorded peak demand on March 05, 2015, at 524 MW (excluding Skorpion zinc mine) against a peak supply of 300 MW recorded from local generation sources.
Shilamba noted that the shortfall between demand and supply continues to be supplemented by imports from various power utilities in the region as part of standing power purchase agreements (PPAs).
“I would like to reassure our stakeholders that we do not foresee an imminent threat to our power supply security – at least not before August 2016,” cautioned Shilanba.
This, he said, is mainly attributable to the re-commissioning of the Van Eck power station from the middle of this year, the rolling out of the DSM programme, which includes the free distribution of one million LED light bulbs and the subsidised installation of 20 000 solar water heaters later this year and the commencement (at the beginning of April) of the 80 MW PPA between NamPower and ZPC (Zimbabwe) which was signed by the two utilities at the end of last year. He however cautioned customers to use electricity wisely and to strive towards saving at least ten percent on their electricity usage.
“Going forward, the most critical period will be after August 2016 when an enormous strain will be placed on the system and when an additional generation capacity of at least 250 MW will be needed to ensure security of supply for the country. Amongst the challenges during that period will be the expiry of the bilateral agreement with Eskom in 2016, lower output from Ruacana (due to lower water level), step loads (including Skorpion when their contract with Eskom expires in 2017) and general higher economic growth,” remarked Shilamba.