16 November 2012

Namibia: Energy Cost Reflective Tariffs Will Attract Investment - Katali

The Mines and Energy Minister has called for a speedy migration towards cost reflective tariffs in the energy sector in order to attract the much needed private sector investment.

Speaking at the official opening of the ten-year anniversary celebrations of the Regional Electricity Regulators Association of Southern Africa (RERA) in the capital this week, Minister Isak Katali said the pace of migration towards cost reflective tariffs is slow and not at the desired rates in most of the SADC Member states.

He said there is need for serious commitment to speed up the transition to cost reflective tariffs or come up with alternative funding mechanisms to mitigate electricity/energy shortages and prevent a full-blown crisis in the long run in the region.

Katali added that in bridging the escalating financial investment gaps in the regional electricity supply industry, there is need to be mindful of the fact that there are other partners in development, especially the private sector, that can augment the efforts of governments and state-owned power utilities.

He said: "....moving towards cost reflective pricing for electricity across the region is ..... a crucial step in assuring the sustainability of national utilities and attracting private investment to a sector in need of new capacity."

But while calling for the speedy migration towards cost reflective tariffs, Minister Katali said people needed to keep in mind the implications of the increased tariffs on the poor majority.

He said: "We also need to be mindful that cost effective energy services may be beyond the reach of the low income or the disadvantaged majority of the population in the SADC region. In this regard, consideration should be made to facilitate the pro-poor electrification support mechanisms, including tariff structures that allow for minimum levels of supply.

However, the minister cautioned that mechanisms put in place to cater for the low -income population should not compromise the sustainability of the power sector.

The energy minister said the slow migration was despite the decision by the SADC Council of Ministers in 2008 that countries within the SADC region should endeavour to reach cost reflective tariffs by 2013.

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