Reds Not Responsible for High Power Tariffs

The cost of electricity continues to rise, but this should not be blamed on the regional electricity distributors (Reds) across the country because it is due to their presence that most small towns do not have to worry about power cuts anymore, Minister of Mines and Energy Isak Katali said.

Concerned citizens have complained about the presence of Reds in the electricity supply chain because they feel it is one of the factors pushing up the price of electricity.

Residents have called on government rather to revert to the system whereby town councils or municipalities handle the electricity affairs of their respective towns.

“People are just talking without presenting any facts. Regional electricity distributors are an aantage especially to the small towns. We must remember that the cost of electricity is high in general, not necessarily because of the Reds,” he said when contacted to comment on the matter.

Katali said most of the towns suffering from electricity cuts are those not under Reds.

“Reds do add to the cost because they have to be maintained, but even if you give the distribution to NamPower or the town councils, they will have engineers and staff who must be paid through the tariffs. But generally, the surcharges charged by the Reds and the generation and trading costs incurred by NamPower are the reasons why electricity is relatively high,” explained the mines and energy minister.

According to Katali, the cost involved in generating or purchasing electricity does not accord electricity distributors the option to sell electricity at a lower price because the selling price needs to be commensurate with the price at which the electricity is acquired from the source.

“Currently you have the small towns like Bethanie and Berseba – those towns are too small to afford to employ engineers and technicians to maintain electricity equipment. But when you have regional electricity distributors, those towns can benefit because the staff of the electricity distributors will be servicing all the towns that fall under them, whether big or small. This also minimises cost on the part of the towns because they do not have to employ more people to handle the electricity affairs of the town.” In terms of challenges, Katali said town councils and municipalities falling under the Reds are not satisfied with the revenue they get from the electricity distributors after transferring their assets to the distributors.

“The issue of assets is a problem, because when the Reds came into being they [municipalities] transferred their assets to them in exchange for equity, but what they are complaining about is that the equity that they are receiving is not commensurate with the investment they made,” he said.

“We still have a pending meeting where we have to find the best possible solution to the problem so that we can mitigate the challenges in this regard,” he said.

Source : New Era