• December 13th, 2018
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Kudu Gas to Power Project: Our failures so far



Pendapala Hangala

Namibians fought bravely for her national independence, sacrificing in the process its beloved sons and daughters for a just cause to politically and economically determine its destiny.

However, as sovereign nation, the country is failing dismally to capitalise on a long-term economic development opportunity to be a totally independent energy generating and exporting nation.   

This national economic development leadership failure to be an independent energy generation and export nation unfortunately covers all the other natural resource endowment potentials which if the country was serious to be an industrialised nation, could have led it to have significantly more ownership, control and management of its natural resource.

With such a regrettable negative leadership approach, the country will never ever be able to truly dictate its economic development agenda since it prefers to instead significantly outsource its natural resources to the highest bidder, with the lame comfort to just receive loyalties and taxes. 

This posture in my opinion strongly betrays and defeats the true aims and objective of the nation’s liberation struggle and should be rectified with the utmost urgency it deserves.   

The Kudu gas field, with an estimated lifespan of more than 25 years, was officially discovered in 1974 about 170 km off the coast of Oranjemund with an initial estimate of about 1.3 trillion cubic feet of proven natural gas reserves and with available exploratory data the field contains approximately 3 trillion cubic feet with the potential to reach 9 trillion cubic feet.  

These are astronomical figures which, if handled patriotically, can in addition to the nation’s other natural resource blessings, significantly alleviate the country’s diverse socio-economic problems and further propel it to be a truly industrialised nation, amongst others.  

The Kudu Gas to Power project was going to cost approximately N$16 billion dollars to completely bring it to life and to thereafter produce an estimated 850 megawatt of electricity which will certainly meet our domestic energy requirements of 520 megawatt with the surplus to be exported. 

The initial development process would have involved Namcor and its technical partners to drill the natural gas upstream, transport it via a 170 km pipeline or in specialised built vessels to an on shore-built gas to power station 25 km near Oranjemund, which would be managed by Nampower through an established special purpose company to connect it to the nation’s national grid. 

This very simple, feasible and affordable process is what would have transpired to successfully make Namibia an independent energy generating and exporting nation, but for what it’s worth, those in power to make this a reality have instead chosen to maintain the status quo which in my honest view is very retrogressive to say the least. 

Nampower, the nation’s national utility company, has since the dawn of independence spent more than N$70 billion dollars (N$2.6 billion dollars per year for 28 years) on the import of electricity from South Africa, a situation which if compared to the required N$16 billion to build the Kudu gas to power generation station clearly demonstrates that Namibia certainly does have the necessary funds to be an independent energy generating nation. 

This sad situation to import power from South Africa is set to go on to the year 2025 and beyond. In addition to the above and to further demonstrate the nation’s ability to fund the establishment of the Kudu gas to power project, GIPF, the nation’s biggest pension fund administrator sits on more than N$106 billion cash resource which for what it’s worth will rather invest more than N$2 billion in the Bank Windhoek financial group which is already a financially stable institution. 

A much closer look at GIFP and the manner in which it invests these public pension funds to questionable private projects will clearly expose the reality that it does certainly have the mandate, capability and potential to invest in viable long term national socio-economic development projects which in my honest and humble opinion the Kudu gas to power project could be one of those special projects. 

With that said, a mixed capital financing model involving perhaps the African Development Bank, Namcor, Nampower, GIPF and/or the general public could have been achieved to bring the Kudu Gas to power project to reality built on the political and economic will to realize this noble goal. 

Going forward, the lame argument that the Kudu Gas to Power project is not viable and will make the cost of electricity higher if brought downstream to Namibians holds no scientific water at all,  especially if one looks at the fact that Nampower has already spent more than N$75 billion dollars over a duration period of 28 years to import power from South Africa compared to a once-off investment of N$16 billion to set up the Kudu gas to power station makes no economic sense.

Namibia should rather pursue to be an energy independent generation and export nation. 
The current cost of bulk electricity at N$1.69 per kilo-watt hour is artificially too high for Namibia and is further not economically sustainable for the long-term economic development goals of the nation especially in an environment where we have options to rather utilize our own energy supply sources. The realization of the Kudu Gas to power project will in my opinion lead to a more competitive lower energy costs per kilo-wat hour in the medium to long term benefit of the domestic market and for our neighboring countries as the financing model to predominately use local funds to develop this energy generation project will make it more competitive as it could be traded in the Rand currency.   

However, to truly see and appreciate these potential long term economic national benefits to the country relative to the devastating social challenges facing the nation will require going forward bold, visionary leadership and a united people which at the moment is not in place hence the political running around looking for billions at generational costs for alternative unproductive investments whilst the nations sits on a pile of tradeable global commodities which it sadly owns but no significant control over.   

* Pendapala Hangala is a Namibian Socio-Economist who strongly believes in the nation’s Vision 2030 development agenda. 


New Era Reporter
2018-10-05 09:24:10 2 months ago

1 Comments

  1. User
    Harald Schutt

    Hey Penda, What a nonsense ! Ask your father for the real figures of Kudu and revise your article ! the only thing we could have done with that gas is to take it out, clean it, cool it down and then load it on ships to sell it on the international markets. With the money we should have financed the energy transition towards RE + storage => export of kWh. De-centralised generation makes sense, not only because we have high cost and up to 15% loss in our grid, but even more importantly because we can channel more money into the pockets of the general population by enhancing net-metering and raise equity for local 5 MW power plants in the areas and region where they are being built. Then learn smart-grid management and become productive based on a long-term stabile price for power. Yours H.