New Era (Windhoek)

12 February 2013

Namibia: Nampower Likely to Increase Electricity Tariff

Rundu — NamPower has warned Namibians to brace for nationwide electricity increases. Last week the power utility's managing director, Paulinus Shilamba, told New Era that it is imperative that the current N$1.50 per kilowatt per hour (kWh) in the country is increased by at least 18 percent on an annual basis so that NamPower operations can become cost-reflective and the utility can continue paying its debts.

If increased at a rate of 18 percent every year over the next five years, tariffs could end up at approximately N$2.85 per kWh. "If tariffs are not increased by at least 18 percent per annum over the next three to five years, NamPower runs the risk of becoming bankrupt," warned Shilamba.

With Namibia importing more than 60 percent of its electricity from South Africa's power utility, Eskom, a tariff hike will have a direct impact on the cost of electricity in the country, said Shilamba, adding that this is a reminder that the country needs to increase its electricity generating capacity.

Eskom just asked the National Energy Regulator of South Africa (NERSA) for a rate of 61 cents a kilowatt-hour in 2012/13, to 128 cents a kWh in 2017/18. This resulted in Eskom getting an increase of 16 percent for 2012/13 effective March 09, 2013. "With the growth of the economy, we will surely import more electricity. To be cost-reflective the tariffs need to be adjusted upwards on an annual basis," said Shilamba.

He added that the envisaged 18 percent annual increase is yet to be agreed upon by NamPower, the Electricity Control Board (ECB) and the government. "With the prices of commodities going up, it is high time that we start generating electricity from our own power plants. Therefore we have decided to invest immensely in electricity generation projects in the country," he said.

NamPower is set to spend about U$S1.1 billion to set up the much-awaited Kudu gas project. "We will have to borrow most of this money to fulfill our obligation. NamPower will own 51 percent of Kudu and the rest will belong to the private sector," he said. In its quest to boost local electricity generation, Shilamba said two sites with small hydro potential have been identified in the country.

"We have identified one at Popa Falls in the Kavango Region, which can produce about 25 megawatts per day and another along the Orange River that can produce about 110 megawatts."

The ECB's Chief Executive Officer Siseho Simasiku explained that tariff adjustments in Namibia take place annually, regardless of what happens at the source.

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