Namibia: Mining Companies Ready to Splash U.S. Dollars for Kudu

	Email This Page Print This Page Comment on this article View comments

Namibia Economist (Windhoek)

25 July 2008
Posted to the web 25 July 2008

Chamwe Kaira
Windhoek

Mining companies have approached power utility NamPower saying they are ready to buy electricity from the Kudu Gas Project in US Dollars, Managing Director Paulinus Shilamba told the Economist this week.

The development of the project has stalled because Tullow and Eskom, NamPower's partner in the project, want to buy the gas in the South African Rand citing the risk that comes with the US Dollar's instability and the higher fuel prices.

"The big mining companies approached us saying they are ready to buy the gas in US Dollars. We are talking to them at the moment," said Shilamba. Mining companies are the biggest consumers of electricity in Namibia.

Shilamba said the assurance by the mining companies to buy in US currency would reduce the risk of developing the project.

"The risk associated with price fluctuations will come down considerably," he said.

He said the increase in electricity tariffs in southern Africa has also made the development of the project more viable.

"Eskom recently asked for tariffs to be increased by 50%, with high tariffs it would be attractive to develop the project on a commercial basis," said Shilamba.

Shilamba said Tullow would soon make a decision whether the gas from the project would be transported by pipeline or through the Compressed Natural Gas (CNG) technology.

"Tullow has indicated that a decision will be known in a few months time," he said. "This (CNG) is a new technology, which is being developed. If it works, then it will be cheaper to compress the gas and ship it to markets in southern Africa and elsewhere."

Kudu has 1.3 trillion cubic feet of proven gas reserves. The project involves the development of an 800 MW gas powered station at Oranjemund.

Tullow said in its interim results two weeks ago that delays in commercial closure have also resulted in alternative options being actively considered.

Tullow said the changing global and regional energy environment has resulted in a combination of local power options combined with direct gas export having the potential to be commercially viable.

"The fast maturing marine CNG technology is being actively pursued as it potentially offers the means for managing both the local and export markets. Technical and commercial studies are currently being conducted to confirm the viability of this development option," Tullow said.

The Kudu gas project is part of the country's efforts to become self-sufficient in electricity generation. Namibia's electricity consumption peaks at approximately 550MW, inclusive of what is consumed by the Skorpion Zinc mine.

Read comments. Write your own.

AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.

Share this on: Facebook Digg Del.icio.us StumbleUpon Muti

Copyright © 2008 Namibia Economist. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here.

Make allAfrica.com your home page | RSS Feed Sign up for FREE daily 'top headlines' by email >>

Top | Site Guide | Who We Are | Advertising | Search | My Account

Questions or Comments? Contact us. Read our Privacy Statement.