By Petronella Sibeene
WINDHOEK
As power shortages persist in Southern Africa and Namibia in particular due to increased demand, the local power regulatory body ECB has approved electricity utility NamPower’s proposed tariff increase.
With the approval of the Electricity Control Board (ECB), NamPower would now increase its tariffs by 13.6 per cent for the financial year 2007/2008.
ECB reviewed the tariffs and scrutinised the proposed increase at its 53rd extra-ordinary meeting.
“The Electricity Control Board is considering NamPower application after it reviewed and analysed the background financial and operational data of the regulated business units of NamPower,” said ECB’s Chief Executive Officer (CEO) Siseho Simasiku.
In 2005, Cabinet took a decision that NamPower tariffs must reach cost reflectivity by the year 2010/11. This means the utility is allowed by the regulator to recover all costs of supplying electricity, which includes operational, administrative and customer care costs.
Of late, Eskom, the energy utility of South Africa, that shares its surplus power with almost the entire Southern African region including Namibia has been faced with serious power shortages resulting in uncertainties with the continued power supplies to its neighbours.
Given the unfavourable arrangements with Eskom, NamPower has to purchase power at substantially higher prices in order to meet demand.
Furthermost, the operational costs for Van Erk and Paratus Power stations are prohibitive.
“These factors resulted in a more substantial increase in electricity tariffs for 2007/8 financial year so as to ensure that Nampower provides in future energy needs of the nation,” he says.
Simasiku feels there is a clear need for investment in generation of power in order for Namibia to become self-reliant in meeting local power demand.
While cost reflectivity is viewed as a pre-requisite for private investors, the current low prices which are not cost-reflective blocks Namibia from being in a position to attract investors for new generation projects. Given that situation, electricity tariff increases are imminent, Simasiku stated.
“Transmission tariffs are currently cost-reflective, hence no increase in demand charges. However, future increases will be necessary to cover the cost of planned transmission network expansions,” he added.
He reiterated there is need to recover and provide for the costs of future network and generation expansions to alleviate possible future price shocks.