Hyphen Hydrogen Energy CEO Marco Raffinetti says the US$10 billion green hydrogen project is by no means dependent on government taking up a 24% equity stake. During a media briefing at Hyphen’s Windhoek office yesterday, he emphasised their unwavering determination, underpinned by Namibia’s potential, to see the project through to fruition.
Hyphen is the preferred bidder for Namibia’s first-ever large-scale vertically-integrated green hydrogen project. This month, government confirmed it would exercise its right to take up a 24% stake in the Hyphen project at a historical cost.
With abundant, world-class renewable energy resources and increasing demand for green hydrogen worldwide, Namibia is slated to be an early entrant into this blossoming market. Developed economies around the world are also pursuing a green hydrogen journey, forcing local government to remain as competitive as possible.
“There is a lot of competition out there. The demand is high, and if they don’t get it from Namibia, they will get it from somewhere else. That will be a lost opportunity to Namibia. It is not an obligation for government to take up the 24% stake; they would like to do it because they believe it is a good investment. We are not forcing government to buy the 24% stake, but it was part of the bidding process as a requirement on how much we have to offer”, Raffinetti explained during the media engagement.
The CEO added that from a value-creation perspective, the project is an excellent deal for Namibia. It is thus a win-win situation for the country.
“Projects are only successful if the country they are in gets to benefit from different aspects. The Namibian government has been doing well in mobilising funds to develop the hydrogen industry. We believe Namibia will be a leading nation globally. As a company, we have confidence in Namibia, and the fact that we spent so much money is enough testament that the project will thrive,” Raffinetti enthused. Hyphen Energy, in collaboration with government, is expected to launch the socio-economic framework for the green hydrogen project next week.
This is scheduled to be followed by a national roadshow to fully explain the entire project to Namibians on the ground.
During these early stages of market development, the CEO said it remains imperative that government focusses efforts on achieving large-scale, low-cost and designing models for sustainably maximising fiscal revenue and local development. He pointed out that Namibia’s world-class solar and wind resources give it a long-term competitive advantage in producing green hydrogen and green ammonia.
In a document shared with media late last week, Namibia’s green hydrogen commissioner James Mnyupe, who doubles as Presidential economic advisor, said scepticism from locals has been heard. He noted that some public advocacy approaches would, in government’s view, make Namibia less attractive in its bid to attract foreign direct investment (FDI) in a globally competitive space, with some competing countries offering billions of US dollars in subsidies.
“It is FDIs that drive economic growth. As for every dollar that foreign investors earn, the Namibian economy will earn several. If foreign investors choose to invest their hard-earned capital elsewhere, it is those countries, and not Namibians, who will benefit. Given the sheer scale of capital required, combined with the complexity of implementing projects that are a first of their kind in the world, it requires skills and financial resources that Namibia just does not have, which is why Namibia has turned to foreign investors to help in launching this new industry,” said Mnyupe.
He stated that when Namibian sceptics advocate for government to demand 24% free carry “because the wind and the sun are ours, they are doing so without possibly fully appreciating all the facts and the globally competitive market dynamics that we operate in”.
“Additionally, these calls for free carry are made without considering the fact that Namibia will earn land rentals, royalties from green hydrogen sales and taxes, on top of the job-creation and localisation targets the project has been tasked with delivering. From all direct revenue lines, government expects that it will receive over 40% of all the distributions available from the project, increasing to over 50%, including its 24% equity stake,” Mnyupe elucidated, trying to put the deal into perspective.
The economic adviser added that based on early estimates, the Hyphen project alone could generate up to 20% of Namibia’s current fiscal take every year for the next 30 to 40 years. Importantly, however, he noted that government is focused on establishing a competitive and scalable industry, with a conservative estimate of 15 to 20 or more equivalent-sized projects.
Therefore, rather than trying to maximise its returns on one project, Namibia is trying to maximise the probability of the success of the establishment of this transformative industry in the entire country.
Earlier this week, the Affirmative Repositioning (AR) movement, under the leadership of its activist Job Amupanda demanded that Hyphen immediately waives a payment requirement for government to obtain a 24% equity stake in the green hydrogen project.
In a letter of demand from the law firm Kadhila Amoomo Legal Practitioners, acting on behalf of AR, Amupanda, also demanded all negotiation proceedings, contractual formulations and agreements be made available to the public or to Parliament.
Upon client instruction, the law firm further demanded that Hyphen provides a courtesy of a reply in response to the demands on or before 15 July 2023. Failure to respond, the letter stated, will prompt AR to pursue court proceedings against Hyphen and the Namibian government.
–mndjavera@nepc.com.na