Windhoek-The Development Bank of Namibia (DBN) has announced details of its involvement in financing Ombepo wind farm near Lüderitz. Bank finance of N$118 million was extended to develop the N$180 million wind farm, which is now nearing completion.
The facility will be owned by a conglomerate of shareholders under InnoSun (95 percent) and Lüderitz Town Council (5 percent). Empowerment grouping Black Diamond Investments owns a 30 percent share in InnoSun.
DBN has previously financed two InnoSun projects – Omburu Sun, which was the first photovoltaic plant to operate as an independent power producer (IPP) under a power purchaser agreement (PPA) with NamPower, and Osona Sun. The Bank is providing finance for five photovoltaic plants, with Ombepo wind farm bringing the total number of renewable energy facilities to six. The Bank’s total finance for renewable energy now stands at N$461 million. The facilities will generate an estimated 24 MW of renewable energy when all are operational.
Talking about finance for renewable energy DBN CEO Martin Inkumbi says the Bank views itself as catalytic in providing finance in areas that are untested for risk in the commercial finance sector, and that the Bank’s finance for renewable energy is no different.
Through its mandate to provide finance for development, and its enterprise-wide risk management framework, the Bank can successfully mitigate its risk, while demonstrating the viability of specific business models from the financing viewpoint.
This, Inkumbi says, was a consideration in providing the first finance for photovoltaic power production and the Ombepo wind turbine facility. He adds that the Bank does not see itself as a competitor for project financing opportunities, rather a pioneer and contributor to understanding of opportunities.
A collaborative approach to finance, Inkumbi continues, is vital to Namibia’s economic sustainability in years to come. He adds that the Bank is gratified that other sources of finance are stepping into the field with finance for other photovoltaic facilities. He also says he hopes that commercial sources of finance will step into other fields of interest in which the Bank is interested, particularly manufacturing and development of affordable land and housing.
Shared interests in addressing various issues, Inkumbi says, can lead to new sources of returns to finance, and this approach is in the spirit of the Harambee Prosperity Plan.
Asked about the specific role of renewable energy in the development of Namibia’s economy, Inkumbi says that Namibia has committed its intended nationally determined contributions (INDC) to increase the share of renewable energy in electricity production to 70 percent by the year 2030. The goal makes economic sense given that renewable energy is not reliant on imports such as coal and fuel. Beyond the cost of importing technology there is no pressure placed on Namibia’s balance of payments.
He goes on to say that renewable energy reduces indirect costs such as social and environmental health impacts that are implicit to carbon fuels. Although Namibia will remain dependent on carbon fuels such as oil, petroleum and coal for the foreseeable future, an increased component of renewable energy will mitigate environmental and health risks. The Bank manages environmental and social matters through its environmental and social management system (ESMS).
Asked about the Bank’s close financing relationship with InnoSun, Inkumbi says the company is an ideal partner. Its investments are held in Namibia and it has demonstrated that it can successfully import and adapt technology to Namibia. It also fulfils the Bank’s requirement for transformation of ownership and local participation with the 30 percent shares held by Black Diamond Investment.
He says the Bank values the competency of its borrowers, and project promoters who have a successful track record with the Bank are welcome to apply for additional finance.
Inkumbi says the Bank is seeking to extend its finance in priority areas and that electricity generation is just one of these fields. “We expect more for Namibia’s future, so we offer more,” he adds.