1 March 2018

Namibia: Nampower Cancels Xaris Deal

ENERGY minister Tom Alweendo says the NamPower board informed him this week that they had terminated the N$5 billion Xaris Energy tender for the construction of a power station at Walvis Bay.

Businessman Boni Paulino owns Xaris Energy with vice president Nangolo Mbumba and his family.

The politically connected company wanted to build a power station to produce electricity for NamPower, but the proposal attracted criticism of favouritism and concerns that it was not practical, and could be costly to electricity customers.

NamPower's board, led by businesswoman Kauna Ndilula, has been secretive about the Xaris Energy matter since taking the reins during December 2016.

Ndilula has been persistently dodging questions about Xaris since last year. The Namibian, however, asked Alweendo this week whether the board had briefed him about the status of the Xaris project when they met on Monday this week.

"Yes, the board briefed me on their decision to terminate the Xaris matter," he said, declining to comment further. Another person who attended the meeting, however, said the board had in a way expressed concern in the manner in which Xaris ended up being selected as NamPower's preferred bidder to construct the N$5 billion power station.

It is unclear what Alweendo's reaction to the briefing by the board was but energy ministry officials said he was also convinced that NamPower picked Xaris irregularly.

Government officials familiar with the matter said the board cancelled the Xaris deal late last year, and informed former energy minister Obeth Kandjoze about it.

According to sources familiar with this transaction, the NamPower board sent termination letters to Xaris Energy and Arandis Power, which also wanted the tender to construct the power station.

An Arandis Power insider, who declined to be named, confirmed that the company had received the cancellation letters.

A source said both companies wrote back to the board, explaining that the decision to terminate the tender was not fair.

Xaris is said to have threatened to take legal action against NamPower while Arandis Power filed a case which is expected to be heard in the Supreme Court at 10h00 today.

"The letter of cancellation of the tender was sent to ourselves and Xaris. Notwithstanding that, we asked Xaris to confirm whether they agreed that the tender was cancelled. They did not agree. So, the outcome will be determined by the Supreme Court," the insider said.

Officials briefed by Alweendo this week said the minister, who is also aware of the legal threats by Xaris, will soon make a public statement on the matter.

This threat could confirm a report by The Namibian last year, which quoted sources as saying Xaris might demand the money they have already invested in the project, if they lose the deal.

Xaris claims on its website to have already invested close to N$400 million in the project, a figure disputed by some experts, who say the amount looks inflated.

Paulino and Mbumba are likely to laugh all the way to the bank if Xaris gets paid for losing the deal.

Mbumba told the media at State House last month when he was sworn in as vice president that his business dealings will not cause a conflict of interest because he has already declared his interests and assets to the President.

"Which one can cause a conflict of interest? Yes, I have business interests in Xaris, but it is a dormant thing now stopped by those who have the power," he said.

The Namibian reported in the past on how Xaris divided opinion between politicians and technocrats in government.

For instance, we reported how Kandjoze requested Cabinet to scrap the Xaris proposal in 2015 because it was not economically viable.

At the time, sources said President Hage Geingob and Prime Minister Saara Kuugongelwa-Amadhila allegedly used their political clout to ensure that Xaris went ahead.

Kuugongelwa-Amadhila's brother, Tylvas, was an associate of Xaris mastermind Paulino.

It is unclear whether Geingob has changed his mind since that 2015 Cabinet meeting, or whether he is still supporting the company of his close ally, Mbumba.

The President has over the years distanced himself from controversial deals.

Questions sent to NamPower's board chairperson Ndilula and Paulino were not answered.

News about the cancellation comes a few months after The Namibian reported on how Xaris was deeply connected to the NamPower board.

That article, published in December last year, reported that four out of six directors of NamPower have connections to the Namibia Financial Institutions Supervisory Authority, where Xaris owner Paulino is a deputy chief executive.

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