NAMIBIA'S national power utility, NamPower, is faced with a potential power supply gap in the future.
This follows and increase in demand and a lack of supply in South Africa and Zambia, which have been experiencing recurrent blackouts.
Both Zambia and South Africa are key suppliers of power to Namibia.
The current problems in the southern African power pool have prompted experts to call on Namibia to develop an immediate back-up plan should guarantee of supply from the country's current contributors, including Zimbabwe, Zambia and South Africa, be compromised.
Retired economics lecturer at the University of Namibia Omu Kakujaha-Matundu says if the country doesn't implement short-term measures swiftly, the ongoing energy crisis in South Africa and Zambia could have a negative impact on the Namibian economy, industries and households.
NamPower currently imports about 72% of its electricity supply, according a Fitch ratings report released last week.
Kakujaha-Matundu says Namibia has been sleeping on the job for too long, and that attempts made to increase the country's baseload are not enough.
"I think Namibia should fast-track those projects that are short term. NamPower has some good short-term projects, it is just a matter of funding them and getting them off the ground. Otherwise, Namibia could be caught with its pants down," Kakujaha-Matundu says.
This comes as South Africa's government recently proposed to declare an electricity state of disaster, while Zambia has announced a cut in electricity exports due to low power generation in the country.
Namibia currently receives 100MW electricity from Eskom, with a further non-firm arrangement for 300MW, which is not available during any load-shedding or emergency event in South Africa.
Last year, NamPower renegotiated and extended its electricity supply agreement with Eskom for a further three years.
"There should be a great deal of concern. If Eskom can plunge its own economy into darkness, what would stop the situation from spilling over to Namibia?
"I think you supply or export what you have, and should Eskom reach a point where it is not in a position to cater for the Namibian market, would you get milk from a stone? Would the contract between the two countries mean much?" Kakujaha-Matundu asks.
RELYING ON IMPORTS
Meanwhile, international rating agency Fitch has said NamPower's high reliance on energy imports in the short term could weaken the utility's financial profile in the medium term.
"The low production from the Ruacana hydro plant in the 2022 financial year led to a significant increase in imported electricity, and an increase in the energy supply cost, which had an impact on the company's cash flow from operations," Fitch said in a report released on Friday.
During 2022, the river flow at Ruacana was significantly slow, leading to a drop in the electricity generated to 781 gigawatt hours.
According to Fitch, NamPower has a capex plan to develop several generation projects with a total capacity of 238 megawatts, which, along with the capacity of 114 megawatts to be developed by independent power producers should reduce the reliance on imported electricity in the medium term.
NamPower expects capital spending on new transmissions to represent almost 57% of total capex for 2023 to 2026, with new generation projects 38%, and other capex 5%.
Fitch said the planned programme is aggressive and entails execution risks.
The agency further reports that among its international peer group, Eskom, Polish Energy Group, and Saudi Electricity Company, NamPower's financial profile is the strongest in terms of funds from its operations' net leverage.
"NamPower's net cash position is mainly due to cash generated from operations and a large cash buffer due to historical delays in capex for new generation capacity," Fitch stated.
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However, the agency said NamPower has a weaker business profile due to smaller-scale, weaker market trends, volatile profitability and significant reliance on load factors at Ruacana and imported electricity.
Fitch affirmed NamPower's credit rating at 'BB-' with a stable outlook. Commenting on the rating, the managing director of High Economic Intelligence, Salomo Hei, said this week the positive outlook is good for NamPower, because the utility could attract investment in its expansion projects.
"Currently, there is an energy crisis globally, and security of supply has been constrained. NamPower is one of the key institutions able to meet demand currently, and its outlook is stable, because it has huge potential for the expansion of generation capacity," Hei said.
NamPower had not responded to emailed questions at the time of going to print.
