12 Percent Hike in Price of Electricity

The Electricity Control Board (ECB) yesterday announced an increase of 13 percent in the tariff for bulk electricity, which is expected to lead to a 12 percent hike in the price of electricity for end-consumers.

Acting CEO of the ECB, Rojas Manyame, made the announcement yesterday in the capital. The increases will be effective for the period July 01, 2014 to June 30, 2015. He noted that the estimated average 12 percent increase applies to those suppliers that have reached cost reflectivity, which means the supplier can afford to service the cost of providing electricity at a determined income. According to Manyame, Nampower requested a bulk electricity tariff increase of 21.29 for the period 20142015 to meet its service delivery costs, but the ECB stuck to the 13 percent increase, as was the case in the 20132014 fiscal year. He said the ECB approved the 13 percent increase in accordance with the approved ECB cost-plus tariff methodology following a close scrutiny of relevant policies, such as the White Paper on Energy Policy of 1998.

He said the ECB also took into account the expectations of key stakeholders, such as consumers, government and the economy at large.

Nampower apparently justified their 21 percent tariff increase proposal on the fact that they are pursuing various transmission and generation projects to secure reliable power supply to Namibia in the short- and long-term. “Nampower remains forced – due to trading obligations under the Supplement Agreement with Eskom – to generate from high incremental cost power stations, which include Van Eck, Paratus, Anixas and other expensive imports, significantly contributing to high tariff increase requirements,” he said.

He further said the ECB also considered the Cabinet decision of 2005, which resolved that Nampower tariffs should remain cost reflective the N$150 million provided by the Ministry of Mines and Energy and the N$20 million availed by the National Energy Fund to provide relieve to consumers against high electricity tariffs. “It has become clear that tariffs alone cannot fund electricity capital projects, such as power stations and transmission lines,” he stressed. He said based on those realities government would continue to provide capital funding for major projects.

He said tariffs would continue to increase above inflation at least until 201192020 to reach the objective stated in the White Paper on Energy Policy of 1998. He said there is a substantial shortage of energy in the southern African region and that the situation would prevail over the next several years until enough new generation capacity has been built. “Currently, Namibia is a net importer – importing between 50-70 percent of its energy requirements from the region depending on the availability of water at the Ruacana Power Station,” he said. Most new generation plants will only start generating power after 2016, because of the time it takes to construct a power plant.

Manyame said they will identify ‘poor’ members of society to come up with low tariffs based on their rate of electricity consumption. He added however that currently there is no subsidy from government to effect such a proposal, but said there would be cross subsidies from various tax categories. According to him tariffs will only start stabilizing once the Kudu Gas project is online, in which case Namibia would no longer need to rely on electricity imports.

Source : New Era