Irene !hoaës
13 November 2008
Windhoek — The Electricity Control Board says electricity tariffs do not increase because of the creation of the regional electricity distributors (REDS), but because of new investments such as new power stations and transmission lines.
The Association of Local Authorities in Namibia (ALAN) has repeatedly complained that the REDS are denying local authorities a good source of income.
The Chief Executive Officer of the ECB, Siseho Simasiku, finds it difficult that local authorities which are the shareholder, or rather the owners of the REDs, are fighting their own companies.
"The local authorities are giving their assets to a private company that should run their assets in a professional manner so that they can maximise profits coming from there," explained Simasiku.
He said the assets are not lost, as the boards of directors are appointed by the local authorities, the shareholders themselves, according to how much they own in that company (the REDs).
Simasiku identified the bone of contention as the fact that local authorities do not yet receive profits from the REDs.
"One of the issues is the fact that they are not recei-ving profit now. In terms of the agreement, the REDs are supposed to make profit after five years.
However, during that time frame, there is no replacement for that money, so what do the owners receive during that period of time?" he questioned.
The electricity regulator's head said that they are currently looking into the issue as to see how that gap will be covered, hopefully with government help.
Another issue that the local authorities are not satisfied with is the local authorities surcharges, whereby the ECB came up with ring-fencing the profit that each LA made and fixed at the 2003/4 value.
The surcharge is not affected by inflation and is constant. This creates a dispute.
"The local authorities are saying if they were the ones implementing, they would increase it by inflation every year and use it to balance their budget.
"You can't use this to balance your budget, and that is where some problems are," Simasiku added.
The surcharge is regulated by the ECB, hence making it difficult for the local authorities to manipulate the charge.
ALAN also claims that they were not consulted on the system of surcharges and transitional charges, which Simasiku said is untrue as there were consultations between all parties.
ALAN states that only the local authorities have the legal mandate to carry out that function and contest the legality of the REDs distributing electricity.
"Yes, we do not have the law but the legal statutes in this country are enough to support the creation of REDs. The direct law on REDs, yes it is not there, but there is enough that gives us the mandate to create REDs," Simasiku defended.
There are supposed to be five REDs but only three have been created so far.
The central RED, which is supposed to be operational in some parts of Khomas, Otjozondjupa and Omaheke is still outstanding.
Simasiku however states that the City of Windhoek does not oppose the creation of the RED as believed by many.
"The feeling is that the LA also needs assistance from GRN, not that they are opposed - they need assistance so that they can provide services to the people more efficiently and more effectively, it's not that they are opposed," Simasiku said about the missing central RED.
The southern RED has not been created due to the existence of the Southern Electricity Company (SELCO) with whom some municipalities in the south signed a 15-year agreement.
The matter is still under negotiation.
Simasiku however admitted that the restructuring process did not look at what effect it would have on local authorities,
"It did not look at that - not see the fact that there would be a gap between the time the REDS is created to the time when the RED will make profit, to pay the owners," he added.
He said the gap needs to be filled.
"That is understandable, you can't just sweep it aside and say to hell with them. We are trying to look at that, ECB together with the Ministry of Mines and Energy and the Ministry of Regional and Local Government, Housing and Rural Development," he said.
He further admitted that the gap does not allow local authorities to receive enough revenue to allow them to continue with their natural responsibilities of providing services.
"Let us work together to find out how that gap created by restructuring can be filled up. There is no reason to fight each other. We have certain realities at the ground, let us fight solutions," Simasiku stated.
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