Energy shortage in SADC puts pressure on tariffs

WINDHOEK: The current substantial shortage of energy in southern Africa is putting pressure on energy tariffs in most countries in the Southern African Development Community (SADC) region.

Namibia last week announced a 9,53 per cent increase in bulk electricity tariffs effective 01 July this year, which means an effective bulk tariff increase from N.dollars 1,17 to N.dollars 1,28 per kilowatt hour (kwh).

Tariff increases mean a rise in the cost of living and production, and the potential to jeopardise job creation and poverty alleviation.

In an interview with Nampa last week, Manager for Economic Regulation at the Electricity Control Board, Pinehas Mutota said increases in bulk electricity tariffs are not only taking place in Namibia, but countries such as Malawi, South Africa, Lesotho, Swaziland among others have also announced increases.

Mutota said that Namibia’s tariff compares well with those countries that have reached cost reflective tariffs.

He said the percentages of the bulk electricity tariff awarded by regulators in southern Africa showed that Malawi had increased by 13,5 per cent, Lesotho by 4,5 per cent, Swaziland by 11,7 per cent, and South Africa by 12,69 per cent.

Mutota noted that Eskom has also applied for an additional 9,58 per cent increase.

Since 2007, the SADC region has been facing challenges in meeting its energy requirements, forcing most of the SADC member states to implement demand-side management policies such as load shedding that have to some extend succeeded in restraining overall electricity in the region.

Reports have it that the SADC plans to commission new energy projects that will add 2 763 megawatts to the regional grid this year as the region targets to meet its energy needs by 2018.

The significant contribution to the regional power grid is expected to come from countries such as Zimbabwe, South Africa, and Democratic Republic of Congo (DRC) among others, the report said.

Namibia imports about 80 per cent of its energy from neighbouring countries and mostly from Eskom in South Africa.

Earlier, NamPower’s Managing Director Paulinus Shilamba assured Namibians that despite the expiry of power supply agreements with some of the neighbouring countries, Namibia does not foresee an imminent threat to its power supply security – at least not before August 2016.

The first agreement, which expired late last year, was with the Zimbabwe Electricity Supply Authority (ZESA), followed by NamPower’s supplementary Eskom agreement, which expired in April 2015.

Other agreements nearing their expiry date are with the world’s largest temporary power generation company, Mozambique’s Aggreko, which lapses in August 2015, and an off-peak agreement with South Africa’s Eskom that expires in April 2016.

Other prospects for electricity provision rest the re-commissioning of the Van Eck power station from the middle of this year; the rolling out of the Demand Site Management (DSM) program, including the free distribution of one million energy-efficient light bulbs; and the commencement with effect from 01 April 2015 of the 80 megawatt (MW) Power Purchase Agreement between NamPower and the Zimbabwe Power Company (ZPC), which was signed late last year.

NamPower is developing the 800 Megawatt Kudu Power Station through KuduPower (Pty) Ltd, a Special Purpose Vehicle (SPV) that was established in 2005.

The Kudu Power Station will be located 25km north of Oranjemund.

The Kudu Power Station will be the first Combined Cycle Gas Turbine power station of this size in Southern Africa and is expected to be commissioned by end of 2018.

Namibia will be a net exporter of electricity after the commissioning of the Kudu Gas-to-Power station in 2018.