Namibia Power Corporation (NamPower) has requested a 14.59% increase in electricity tariffs from the Electricity Control Board (ECB) for the 2024/25 financial year. The proposed increase will raise the average transmission customer tariff from 198.56 c/kWh to 227.53 c/kWh.
If the ECB approves the tariff increase, Namibian consumers will have to squeeze their belts even more, particularly to stay warm during the upcoming winter. This would put an additional burden on already-depleted pockets for consumers, who are still reeling from a high inflationary environment, exacerbated by steep hikes in petrol and food prices, which have been worsened by Covid-19 and global supply-chain restrictions.
These increases mean regional electricity distributors (REDs), local authorities and large power consumers, such as mines and major industries, that buy electricity directly from NamPower, will pay more for electricity. This will indirectly impact local consumers.
The ECB in 2022 announced an increase in bulk electricity tariffs of 7.30% from N$1.6982 to N$1.8222 per kilowatt hour (kWh) for the 2022/23 period. The approved increase followed a tariff decrease in 2019/20. No tariff increases were affected for 2020/21, with an increase of 2.29% in 2021/22.
In a statement released last week, NamPower said the requested increase will enable the utility to continue providing customers with a reliable service.
Interestingly, one of the factors that led to NamPower asking for an increase is the actual energy cost, as Namibia is importing 70% of electricity needs, despite it being the second largest producer of uranium in the world.
“The cost of imported energy has risen significantly over the year due to the Namibian dollar devaluing against the US dollar, resulting in a 12.4% increase in the cost of US$-imported energy solely due to the exchange rate,” reads the NamPower statement.
It added that the National Energy Regulator of South Africa has approved substantial tariff increases, resulting in a 12.74% increase in Eskom import costs in April 2024, with a forecasted 8% increase for April 2025.
Local energy economist David Jarrett said government should start thinking of new ways to reduce electricity tariffs in the future.
He said such increases are substantial and significant to consumers, as they are already facing many recent price hikes.
He added the effect of the increase on the average consumer would expand through residential retail rates that will escalate with anything that utilises power.
He, therefore, urged consumers to consider energy efficiency in their homes, saying it should be treated as a scarce resource. Jarrett added that if approved, NamPower will reduce disposable incomes and push inflation across all sectors of the domestic economy.