Reform needed for a sustainable electricity distribution sector - Alweendo
WINDHOEK– Despite Namibia being in the process of becoming more self-sufficient in terms of electricity production, the country is still overly reliant on sourcing power from neighbouring countries as it still imports approximately 60 percent of its electricity requirements. Due to this factor, the country has to identify new means to generate more electricity locally and to make it more accessible in the country where electricity-wise less than 50 percent of the population is connected. This is according to Minister of Mines and Energy, Tom Alweendo, who shared these sentiments while addressing the 2018 Electricity Supply Industry Forum, which took place in Walvis Bay yesterday, under the theme ‘Building a Sustainable Future’.
As part of the process to generate more electricity locally, 18 independent power producers (IPPs) have signed Power Purchase Agreements (PPAs) with NamPower to supply 171 MW of renewable energy generation projects. In addition, Cabinet has approved the National Integrated Resource Plan, which aims to find least-cost electricity generation options to meet the country’s needs over the next 20 years.
“In the process of making these changes, the industry as a whole will have to change. The electricity distribution sector has already evolved since independence, with the establishment of regional electricity distributors (REDs) to increase the reliability of electricity at affordable tariffs. But more change and reform is still needed. It is my view that our reform process will be less than successful with the current structure that is characterised by a single buyer of electricity. There is no doubt that IPPs should continue to be a feature of our electricity supply industry; they increase the local supply of electricity without creating more reliance on extremely limited state investment funds. It is therefore important that we continue to reform our electricity supply industry with a view to encourage more private sector investment in power generation,” said Alweendo.
He added that in light of the country’s abundant natural resources, ideal for renewable energy production such as solar, wind and biomass energy, creating an environment that stimulates private investment in electricity distribution should be a priority.
“In this respect, government has drafted an Independent Power Producer (IPP) Policy that outlines the key provisions of the government’s commitment to encourage private investment in our power sector. The IPP policy also outlines the electricity market model, pricing regime, procurement approach, and the requirements for the IPPs to develop power generation projects and seek licences for implementing the projects,” Alweendo added. He however emphasised that any policy aiming to create an attractive investment destination into this specific industry must consider the unique type of resource that electricity is. “Electricity is not simply a commodity; it is both crucial to development and a necessity for all people regardless of their social status. Poor people need electricity just as much rich people need electricity; young people need electricity just as old people need electricity.
As a result, keeping electricity affordable and preventing producers from building huge profits into tariffs, are both crucial to maintaining electricity as a sustainable resource,” said Alweendo.
He said that for the electricity sector in particular, a sustainable future must be a priority because energy is quite literally the lifeblood of modern society as it exists today.
“It powers not only the economy, but also households, schools, hospitals and agriculture, to name but a few. A sustainable future will need to draw on new and innovative methods of power production. That means for us in the electricity supply industry that our relevance is based on ensuring that electricity is available on demand to all our citizens at an affordable price without compromising the ability of future generations to do the same,” Alweendo noted.