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Namibia: Energy Projects to Gobble N$10bn
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New Era (Windhoek)
12 May 2008
Posted to the web 12 May 2008
Petronella Sibeene
Windhoek
NamPower will need about N$10 billion in the next five years to boost its efforts to counter acute power shortages in the country.
Namibia is facing a critical energy crisis as South Africa, Namibia's main power supplier, early this year announced it could no longer feed its trading partners regularly due to a rise in local power demand.
Nampower Manager for Marketing and Corporation Communications, John Kaimu, told journalists at Ruacana during the weekend that the N$10 billion will be mainly raised through bond listing, concessionary and commercial loans, own equity and Government equity injection of N$1 billion.
Sourcing funds might not be a problem because, according to Kaimu, "NamPower is the first Namibian owned enterprise to be Fitch rated. It has an investment grade."
Government in its 2008/9 budget allocated N$610 million to NamPower for emergency projects.
"The money is to cater for emergency generation and to ensure that no major power interruption is experienced in the country," Kaimu told New Era.
Emergency projects include the installation of 50-megawatt diesel generators at Paratus in Walvis Bay. The project regarded as the first phase of such activities will be implemented in the next five to six months, Kaimu said.
Installation of one diesel generator will cost NamPower approximately N$500 million.
The second phase to be undertaken within 12 to 18 months will see the installation of an additional 100-megawatt generator at the coastal area.
"All these are measures aimed at minimising load-shedding," Kaimu added.
Namibia has a power generation capacity of 384 megawatts with the maximum demand standing at 449 megawatts.
Demand is forecast at 1400 megawatts by 2030.
The country's backbone generation station remains the Ruacana Hydro Power Station that generates 63 percent of the country's capacity, with 37 percent being thermal power generation.
Namibia remains an insignificant player in power generation in the SADC region, falling among the few countries that make up 4.4 percent of power generators in the region.
South Africa generates 80.4 percent of electricity in SADC with Mozambique generating 5 percent, Zambia 3.6 percent, Zimbabwe 4.1 percent and Democratic Republic of Congo (DRC) 2.6 percent.
Kaimu said power demand in SADC is increasing at the rate of three percent (1200 megawatts) annually.
Insufficient investment due to unattractive low tariffs and the lack of building of power generation plants have all been cited as factors that have contributed to today's power deficit.
"The region has been operating below cost reflectivity (hence the inability to attract investors in power generation)," Kaimu stressed.
Transmission constraints in South Africa have also compromised Namibia's power import activities as Namibia uses South African grids to import power from other countries until the Caprivi Interconnector link is commissioned.
Namibia has a 15-year trading agreement with Eskom, a renewable power supply agreement of 40 megawatts with Electricidade de Mozambique, a 100 megawatts pending purchase agreement with the Zambia Electricity Supply Corporation (Zesco) and other pending power purchase agreements with DRC and Botswana.
Government targets at least 75 percent self-sufficiency in power generation in the country.
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"Electricity is so crucial and dependency can also act as a threat in case of change in political stability in other countries," Kaimu said.
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