14 February 2013

Namibia: Proposed Carbon Tax Could Burden Consumers

State power utility, Nampower, fears that government's plans to promulgate the carbon tax law may hit electricity consumers the hardest, as the power utility will be forced to increase the cost of electricity.

Speaking to New Era on energy issues in the country on Monday, NamPower Managing Director, Paulinus Shilamba, was candid in his view that the envisaged law should be carefully crafted, before it is implemented to avoid high electricity prices in the country.

"This could have a detrimental impact on an industry like ours, because our consumers will end up being affected the most.

Therefore NamPower must be given the opportunity to make inputs and explain how the electricity industry will be affected once the carbon tax law is enacted," he said.

"Perhaps the timing of the carbon tax is not right. It will work on more mature industries such as the transport sector, because it will encourage people to buy cars with minimal emissions. Therefore lawmakers should perhaps even consider exempting the electricity industry until such a time that the industry is on its feet," said Shilamba.

e said Namibia is in dire need of cheap electricity and that is why a carbon tax, if not well crafted, could undermine sustainable electricity supply in the country. Shilamba said only 46 percent of the electricity consumed locally is generated in Namibia. The Zambia Electricity Supply Corporation Limited (ZESCO) supplies 10 percent of the country's electricity requirements and another 23 percent comes from ESKOM in South Africa, while 21 percent is imported from the Zimbabwe Electricity Supply Authority (ZESA).

The MD said bulk electricity distributors such as the City of Windhoek and the mining sector are the country's top three electricity consumers. In order to upgrade the country's sole coal power station, Shilamba said, the Van Eck station is currently being rehabilitated at a cost of N$300 million. "The station is very old, hence its emission levels went up while its efficiency has declined drastically. After the rehabilitation process, we are looking at operating at least three of its machines continuously throughout the year. In its current stage, only one machine can be operated," said the Nampower CEO.

Shilamba said the rehabilitation exercise is expected to be completed by next year. NamPower operates the country's sole coal power station, the Van Eck coal power station in Windhoek. The country's total current electricity demand is said to be around 550 megawatt.

Existing electricity sources include the Van Eck coal power station (120 megawatt), Ruacana hydro-electric power station (240 megawatt) and the Walvis Bay Paratus diesel power station (18.5 megawatt).

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