Kudu Gas On Course, Despite Tullow’s Departure

The departure of Tullow from Kudu Gas would not affect the scheduled timeline to bring the Kudu on-stream and there are currently bidders under evaluation for the upstream face, the Permanent Secretary of the Ministry of Mines and Energy, Kahijoro Kahuure said yesterday.

Further, Kahuure says Tullow has committed to the project until final investment decision phase in June 2015, for Tullow to have a smooth exit from operatorship. Discussions are on going between Namibia Petroleum Corporation (Namcor) and Tullow on operatorship and re-distribution of equity in the upstream project. “During the transitional period an operational andor project management services company will be solicited to provide the necessary operational skills and resources to deliver the Kudu project,” Kahuure said.

There are also three companies who have been short listed for the strategic equity investor, all vying for the 19 percent equity stake in the downstream phase of the Kudu gas project. The ministry says the successful bidder could be announced by February 2015.

For operation and maintenance, there are four companies that have been shortlisted they too could be announced by February next year. For the engineering, procurement and construction phase of the project, the ministry has Shanghai Electric Company with Siemens, as original equipment manufacturers, as the preferred bidders, along with reserve bidding company that is a joint venture between MHPS, Posco and Sumitomo. The current negotiations are on the finalisation of “long term service agreement on the power island between Kudu Power and Siemens covering maintenance for the first six years on the power island,” Kahuure said.

The power purchase agreement for the 885 megawatts produced by Kudu Gas has also been finalised with NamPower, who would sell the power to Namibia as well as outside Namibia. Negotiations for power export agreement are ongoing with CEC Africa as the main off taker after NamPower.

Standard Bank has been appointed as the mandated lead arranger who would source funds and appoint lender’s aisers doing the due diligence on all aspects of the project. Essential funding is expected to be concluded by June 2015. Funding is likely to be sourced from the export credit agencies in China and Germany as well as development funding institutions in China and Europe as well as from commercial banks in the region.

The general manager of regulations at Electricity Control Board (ECB), Rogers Manyeme, responded to speculations that electricity tariffs are going to rise even after the completion of the project which is said to be a major concern among community member said ECB will allocate the tariffs inline with the standards set by ECB and prior to the demands of the consumers but said the tariffs are likely to reduce.

Source : New Era