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Home / Green hydrogen negotiations still ongoing …excess benefits expected from multi-billion dollar project

Green hydrogen negotiations still ongoing …excess benefits expected from multi-billion dollar project

2022-11-07  Maihapa Ndjavera

Green hydrogen negotiations still ongoing …excess benefits expected from multi-billion dollar project

Maihapa Ndjavera

Mines minister Tom Alweendo said government has not agreed and is not contemplating to build houses for Hyphen employees in Lüderitz. Hyphen is the preferred bidder for Namibia’s first large-scale vertically integrated green hydrogen project.

Responding to questions in the National Assembly last week, the mines minister made it clear that negotiations have not been yet been concluded, and pleaded the need for confidentiality while terms are being finalised. 

“The negotiations involve various elements to do with socio-economic aspects, such as employment, skills development, enterprise and supplier development supplementary infrastructure delivery and corporate social responsibility,” he noted. 

Hyphen Hydrogen Energy is a joint venture between Nicholas Holdings and Enertrag South Africa.  As the preferred bidder, Hyphen was selected for a 40-year deal to develop Namibia’s US$9.4 billion green hydrogen project in the Tsau //Khaeb National Park. 

The project is anticipated to produce 300 000 tonnes of hydrogen per year. Questions regarding the negotiations emanated from a draft feasibility and implementation agreement (FIA) between Hyphen and government that was leaked late last month by AR activist Job Amupanda on various social media platforms. The leaked documents showed that Hyphen believes government should provide accommodation and related infrastructure for all of its employees as well as supply chain companies’ employees in and around Lüderitz.

“While Hyphen agrees that it is responsible for such things during the construction period, Hyphen believes that government, in its role as sovereign, should be responsible for them (housing) after the commercial operation date as part of the general social and economic development of the area,” the agreement states.

The documents also alleged that Hyphen requested no mining licences and exploration EPLs in coastal areas for over 40 years, but Alweendo clarified no such promise has been made to Hyphen. 

He added negotiations on this issue encompass the energy infrastructure to be constructed to co-exist with mining infrastructure that already exists, or which could be built in the future.

 As such, the mines and energy minister noted that Namibia can be the winner if the two industries can co-exist. Alweendo added that green hydrogen, green ammonia and other derivatives, such as e-kerosine/jet fuel are all products that Namibia may be uniquely endowed to manufacture, consume and export as the world looks for solutions to decarbonise the hard-to-abate industries, such as shipping.  He further noted these new green industries promise to be a multi-billion-dollar undertaking, creating hundreds of thousands of jobs. “An industry with such potential and unique features warrants a strong legislative universe upon which to launch a globally competitive offering. The government will research and craft a Synthetic Fuels Bill – and just like other laws that have been crafted, it will be brought to the August House for consideration and debate,” explained Alweendo.

Furthermore, the minister said Namibia stands to receive more than just traditional taxes. 

There is an aspiration to create meaningful ownership and strategic wealth creation through various mechanisms, including shareholding in the envisioned company. Alweendo also noted strategic infrastructures, such as ports, roads, energy transmission lines and pipelines are some that will be improved or
constructed in the country.  Dependent on the final outcomes of the negotiations, the first of many such a project over the lifetime of the project could generate IRRs more than 15% for government’s investment, royalties in excess of €4 billion (N$71.4 billion), income tax of more than €900 million (N$16 billion) and concession fees north of €600 million
(N$10 billion).


2022-11-07  Maihapa Ndjavera

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