Erastus Uutoni, Minister of Urban and Rural Development, yesterday stated that regional and local authorities owe a staggering N$1.5 billion to bulk service suppliers.
Uutoni made these remarks at the opening of the Namibia Electricity Distribution Industry (EDI) summit in the capital where he said this amount is owed to NamPower and NamWater.
The two-day event is being held under the theme ‘Towards a reliable, sustainable and efficient electricity distribution industry’.
“As a custodian ministry, entrusted with overseeing regional and local authorities, it has come or has become evident that household affordability, revenue collection, higher tariffs, debt control measures and ageing infrastructures are among the key factors contributing to the higher debt levels that local authorities owe bulk suppliers for water and electricity,” said Uutoni.
In this regard, he noted that the government will continue implementing various interventions aimed at ensuring the availability of basic municipal infrastructure and services that comprise a large percentage of the development budget.
At the same occasion, energy minister Tom Alweendo noted that challenges of local authorities are complex and need long-term interventions. “Challenges that still lie ahead of us require not just our attention, but our empathy, our collective wisdom, and our unwavering commitment to find solutions,” Alweendo pointed out.
He added the foremost challenge is the issue of funding for local authorities.
“I cannot stress enough the importance of resolving this challenge. It has been the most significant impediment to the EDI reform. Many local authorities are apprehensive about joining the regional electricity distributors (RED) primarily due to the uncertainty surrounding the funding of other essential local authority services. And this concern is not just legitimate,” stated the minister.
Addressing the diverse audiences in the sector, Alweendo said another challenge is the lack of a clear legal framework for governing the establishment and operation of the REDs.
This, he said, is in response to a perceived increase in electricity tariffs attributed to the establishment of the REDs and the need for a more equitable and transparent methodology in determining surcharges that place a financial burden on local authorities.
These financial strains, Alweendo believes, lead to the challenge of settling bulk service providers’ debt which demand urgent attention.
“This is not just about finding quick fixes. It is about understanding the underlying issues,” the minister advised.
Looming RED battle
The aim of the Electricity Control Board (ECB) is to create a central RED that is accessible to all. According to ECB, the City of Windhoek will not be able to properly and effectively supply electricity to its residents.
“City of Windhoek is disappointed and concerned about the ECB’s decision to act outside of its role as a neutral regulator of the electricity sector. The ECB’s position appears to support an agenda that does not align with the interests of local authorities, who are the legal distributors of electricity and constitutionally established local governments,” reads a statement released on Wednesday by the city Windhoek council.
Meanwhile, the City affirmed its position as the largest and most efficient electricity distributor in the country, with a proven track record of managing its electricity resources without owing NamPower.
It further acknowledged difficulties faced by smaller local authorities in providing electricity and stated it supports initiatives aimed at improving capacity and sustainability while preserving autonomy and sovereignty.
“The City understands the ECB’s intention to create a Central RED using the City’s expertise and resources to assist these entities, but this should not come at the expense of the City and its residents,” read a statement from the City.