Government Flexes Muscles to Make Kudu More Attractive

Following concern expressed by the mining industry regarding the security of an uninterrupted supply of power, the Minister of Mines and Energy, Obeth Kandjoze, this week said government has reduced both technical and financial risks to spur on the realization of the much anticipated Kudu gas-to-power project.

The industry, through the Chamber of Mines of Namibia (CMN), also expressed anxiety about the rising cost of electricity.

“The chamber is concerned that electricity tariffs are increasing way above Namibia’s consumer price inflation (CPI) on a yearly basis, even when NamPower has declared that cost reflectivity tariffs had been reached some three years ago.

“Chamber members are extremely burdened by depressed commodity prices and any further tariff increases and additional levies are impacting negatively on the competitiveness of mines in Namibia,” said former CMN president, Werner Duvenhage. Responding to industry concerns, Kandjoze said that while Namibia remains a net importer of electricity, several generation projects are planned in line with the National Integrated Resource Plan (NIRP). The mines and energy minister noted that to ensure the Kudu gas project reaches financial closure and that electricity tariffs are affordable, government issued credit support to the project to this effect.

In the national budget, which was tabled about two months ago, Minister of Finance, Calle Schlettwein, also allocated close to N$5 billion for the project during the Medium Term Expenditure Framework. The 884MW kudu power plant will be located in the area of Oranjemund and is expected to be commissioned in 2019. Meanwhile, during the short-term supply (2016 – 2019), and in accordance with the NIRP to ensure a reliable supply of electricity, the mines and energy ministry and relevant stakeholders are exploring viable supply options to meet increasing demand and to replace any import contracts that are unable to be renewed. “The short-term solution is to cover the period until Kudu power is commissioned in 2019. It is expected that Kudu power, which represents the least cost of supply for Namibia, will replace the high electricity costs from imports and short-term supply,” explained Kandjoze.

The minister added that as a long-term solution government is investigating the development of the Baynes project, which is a proposed 300MW hydropower plant that will be developed by Namibia and Angola. Kandjoze also recommended that other long-term solutions such as renewable energy be considered as part of Namibia’s energy mix.

“In addressing the supply challenges the government remains focused to ensure that all solutions are considered taking into consideration the strategic flexibility of the country to ensure that the main projects, Kudu and Baynes are on line as expected. The Ministry of Mines and Energy assures the industry of a sustainable and reliable supply of electricity in the short, medium and long-term”, said Kandjoze.

Source : New Era