Electricity in Short Supply and Expensive

ELECTRICITY is in short supply in southern Africa and also becoming expensive, NamPower managing diretcor, Paulinus Shilamba told members of the mining industry last week.

Shilamba said most existing import contracts with neighbouring countries are on the verge of termination as demand in those countries surge.

The import agreement with ZESA of Zimbabwe has been reduced from 150 MW to 80 MW, Shilamba said.

He said the supplemental agreement with Eskom of 200 MW was extended in April but said this was awaiting approval from the South African government.

The 115 MW agreement with Aggreko of Mozambique will expire in August this year. He said the 300 MW off peak agreements with Eskom will expire in April next year.

Adding to the demand is the surge in power demand in the north of the country leading to NamPower to invest US$700 million in upgrading the transmission backbone supplying the region.

Figures presented by Shilamba showed that Namibia’s electricity import bill is set to reach N$2,6 billion this year and rise over N$12 billion over the next four years.

Shilamba said Namibia will remain challenged at least until the commissioning of the Kudu power plant in 201819.

The plant will be powered by gas offshore Namibia. Kudu is expected to make Namibia a net exporter of power. The estimated capital cost for the power station and transmission lines is N$1,3 billion.

For this year and next year, Shilamba said NamPower has secured adequate power supply solutions and no serious power supply disruptions are expected.

“Due to higher costs of imports and new power supply projects, electricity tariffs will continue to increase at a high rate after which prices will stabilise, in real terms, after the introduction of Kudu in 2018,” said Shilamba.

Namibia relies on power imports of up to 80% during dry seasons. Shilamba said NamPower with the help of KPMG and other international consultants identified a shortfall of 400 MW prior to Kudu coming on stream and has developed a power supply strategy to ensure security of supply. The strategy includes refurbishing local generation plants, he said.

Namibia and Angola plan to develop the Baynes hydro power project on the Kunene River with the dam and power station expected to cost US$1,3 billion. Shilamba said outstanding work on the project include the drafting of a water regulation bilateral agreement and the conclusion of negotiations with the affected communities.

Shilamba said capital requirements for new generation and transmission projects over the next five to six years is N$40 billion, which Nampower plans to raise through debts, equity and loans, cash reserves, bonds and government funding.

Source : The Namibian