New Era (Windhoek)

Namibia: The 2012 Achievements and Challenges of the Ministry of Mines and Energy

DURING the year 2012, the Ministry of Mines and Energy continued to execute its mandate as custodian of Namibia's rich endowment of mineral resources and creating an environment in which these resources contribute to the country's socio-economic development. Below are the highlights, achievements and challenges experienced in the past 10 months of the 2012/13 financial year.

1. Electricity

During the year under review, 98 centres were provided with grid electricity throughout the country. This is in line with the ministry's commitment to provide electricity to all schools and other government buildings in rural areas in all 13 regions of the country. The Permanent Joint Technical Commission (PJTC) between Angola and Namibia made good progress in the negotiations to develop the Baynes Hydropower Scheme, with the techno-economic study as well as the Environment Impact Assessment study finalised.

2. Energy Downstream

There were 11 adjustments in fuel prices in the year under review comprising of eight increases, two decreases as well as at one time when the fuel price remained unchanged. The increases were owed to numerous factors in the global oil market, with the major factors being the market forces of supply and demand. The explosion of developments in the new emerging economies like Brazil, India and China, with their enormous appetite for oil to meet their development agendas, also contributed to the escalation in oil prices.

Another major factor was the political instability in the oil-rich region that halted the production of oil, creating a sudden shortage of supply in the market, which induced high demand. The exchange rate between the US dollar and the Namibian dollar also contributes significantly to the fluctuation in prices per barrel as oil companies import oil into the country.

3. Renewable Energy Sector

There was good progress in the Off-Grid Energisation Master Plan in the quest to achieve the main goal of providing and bringing sustainable energy services closer to rural communities. The Solar Revolving Fund (SRF) approved 211 loans in the 2011 financial year amounting to N$5.6 million, while in 2012 there were 332 loans approved, with installation completed, amounting to N$8 million.

There are still 660 clients with loans in the loan book inherited from the previous SRF administrator. The SRF's total loan book value now stands at N$ 4.6 million. There are now 13 Energy Shops in 12 regions with the exception of the Khomas Region. The Energy Shops are well equipped with affordable solar technologies.

Challenges

The SRF has recognised the need to capacitate service providers in order to strengthen further the quality of systems being installed and also to improve on their administration procedures since this can cause unnecessary delays in the installation of systems. This has resulted in the ministry appointing two inspectors to ensure the quality of renewable energy systems being installed across the country.

4. Petroleum Exploration Activities

Two exploration wells were drilled in the period under review, the first one by Chariot Oil and Gas and the second well by the consortium comprising of Petrobras, BP and Chariot. This is a very good achievement since it is the first time since the mid-1990s that petroleum companies joined efforts to drill wells.

There has been a rise in the number of companies carrying out 2D and 3D seismic surveys, adding to the ministry's already rich offshore seismic database. The ministry has, together with Namcor, announced a new data acquisition initiative by PGS, GXT(ION) and Fugro for the areas not covered by seismic data collection in the past.

The ministry negotiated and issued a number of additional petroleum exploration licenses, enabling the ministry to create a portfolio of different exploration companies.

The rise also created an exploration momentum that would lead to a swell of drilling of wells in the years to come. Kudu gas has been revived and the ministry is currently hard at work with partners to iron out the stumbling blocks in the way of bringing the project on stream. There is a new impetus and a complete buy-in on the part of government to realise this project by 2017.

5. National Energy Fund Division

Achievements

The National Energy Fund (NEF) continued meeting its primary objective of subsidising the fuel price. Nearly N$200 million was paid to the supplier of petroleum products between April and November 2012. The total cost of subsidising the cost of transporting fuel to rural or far-flung areas of Namibia was about N$75 million for the period between April and November 2012.

Cabinet has also approved the National Oil Storage Levy of 15 cents to cater for the construction of a National Oil Storage facility at Walvis Bay at a cost of approximately N$1.5 billion.

The NEF Financial Management System, Solar Revolving Financial Management, Load Management System and Petroleum Management System have been fully implemented at a cost of N$2.9 million.

Challenges

There is currently a review of the constitution and functions of the National Energy Council to align it with the increasing activities of the NEF, the oil industry and the Electricity Supply Industry (ESI). In terms of the applicable Act, the NEC should oversee or direct the activities of the fund. The review of the constitution and functions of the NEC will require the council to establish a committee within the NEC that will direct the activities of the fund and serve as a statutory board to the fund.

The Fund's revenues and expenditures have increased significantly over the past two years and the full implementation of the Petroleum Products and Energy Amendment Act 2003, is in full swing.

6. Geological Survey of Namibia

Milestones

One of the most significant achievements was the final data delivery of the High-Resolution Airborne Geophysical Survey, a project that started in 1994. Namibia now has complete coverage of magnetic and radiometric data, in the form of one of the best data sets in the world. This represents an important drawcard for attracting investment in the minerals exploration sector. A project for the interpretation of the data has also started.

The Walvis Ridge Passive Source Experiment (WALPAS) was undertaken in cooperation with researchers from Germany, to map lithospheric and deeper upper mantle structures beneath the continental margin of northern Namibia.

Moreover, the Tsumeb Geophysical Station was completely renovated and is now a functional research station, carrying out seismological measurements and monitoring for the Comprehensive Nuclear Test Ban Treaty Organisation.

Also, the geochemical laboratory of the Geological Survey of Namibia took delivery of a new X-Ray Fluorescence Spectrometer, a modern state-of-the-art analytical instrument for the determination of the composition of geological samples. Analysing of samples from the regional geochemical survey has started, and the release of the first geochemical anomaly map is expected soon.

7. Mines

The directorate issued several new exclusive prospecting licences and the backlog has decreased significantly. Three mining licences were issued - to Zonge Resources, Oshiyela Iron Ore and Oryx Gold. The directorate has successfully collaborated with the Ministry of Environment and Tourism, and other implementing partners in the steering, management and monitoring of the Country Pilot Partnership Programme for Integrated Sustainable Land Management since its inception.

The programme's five-year piloting phase is nearing its completion by the end of 2012 and Cabinet has already issued a directive endorsing the plan of the Ministry of Environment and Tourism (the sustainability plan) to upscale improved practices, including policy interventions to pursue environmental sustainability within land and natural resources use programmes in partnership with the affected ministries.

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