WINDHOEK – While the supply of electricity in Namibia is reliable and constant, the affordability thereof and continuously increasing prices pose a massive challenge for the country’s manufacturing and industrialisation ambitions. “Electricity in Namibia is availed but it is very expensive and we maintain that it is too expensive,” said Minister of Trade and Industry, Calle Schlettwein.
Speaking at yesterday’s (Thursday’s) Namibia Energy Policy Forum, organised by the Namibia Chamber of Commerce and Industry (NCCI), Schlettwein said energy supply and affordability is a key consideration by investors, particularly those involved in manufacturing activities, and he emphasised that the current prices place the country in an uncompetitive situation. The Trade Minister added that he was extremely concerned in light of the fact that other basic services, such as water, was following a similar trend. “Namibia currently has the third highest electricity prices within the Southern African Development Community (SADC) region and the challenge must urgently be addressed as it is an unsustainable situation,” remarked Schlettwein. Namibia is reported to have the second highest industrial electricity tariffs, after Mauritius. In fact, South Africa’s electricity rates are estimated to be 20 percent to 25 percent lower than Namibia, a situation that Schlettwein said could erode the country’s industrialisation process.
The Trade Minister’s proposed solutions to decrease the prices of electricity in the country include improved competition in the energy sector, improved operational efficiency and productivity and to allow Independent Power Producers (IPPs) to enter the market through competitive bidding processes.
Also speaking at he Energy Forum, Managing Director of Nampower, Paulinus Shilamba, pointed out that the national power utility does not foresee a supply problem until 2016/17. “The electricity situation in Namibia is currently under control and we are the only country in the region that has not instituted load shedding,” said Shilamba. However, the Nampower chief pointed out that during 2013/14 Namibia imported 61 percent of its energy needs and locally generated only 39 percent. During 2015 alone Namibia is expected to spend N$2.4 billion on electricity imports, while during the next four years this figure will reportedly rise to N$10 billion. However, Shilamba was quick to note that spending this massive amount of money on ensuring the reliable supply of electricity will not increase Namibia’s assets and will not create jobs or strengthen the economy. “It will be cheaper for Namibia to generate electricity locally compared to the price of importing electricity,” noted Shilamba.
Shilmba continued that he expects electricity tariffs to continue increasing until the commissioning of the base-load Kudu Power Station in 2018. “Not adding new generation capacity both before and after Kudu will have a significant impact on the Namibian economy. We require an additional 400MW prior to Kudu and we need an additional 250MW after Kudu,” warned Shilamba.
Meanwhile, Minister of Mines and Energy, Isak Katali, commented that recent developments on the Kudu Gas Project, such as the financing of the National Petroleum Corporation’s (Namcor’s) 44 percent shareholding, will make the project attractive enough for major investors. However, Katali cautioned that time on the Kudu Gas project is critical and any further delays will have serious cost implications.
During the opening remarks of the forum, the Chief Executive Officer of the NCCI, Tarah Shaanika, said Namibia needs to ensure that it becomes self-sufficient in energy production. “It is not prudent for Namibia to rely on energy from other countries. We cannot afford to procrastinate on this issue any further. Industries need a constant, uninterrupted supply of energy at an affordable rate,” noted Shaanika.
By Edgar Brandt