Nampower Bee Policy Under Attack

THE decision by the Namibian Power Corporation’s board of directors to revise the company’s Black Economic Empowerment policy and give more contracts to black-owned firms has come under fire from the company’s management and some of its development partners.

While the company is in the process of defending its BEE policy in court, pressure is also being applied by management and developmental partners for the utility’s board not to enforce new BEE guidelines.

The Namibian has learned that NamPower is facing another BEE battle from German government-owned development bank KfW.

NamPower management entered a funding agreement with KfW worth about N$150 million. As part of the agreement KfW is going to give NamPower a loan of about N$120 million for the distributing more than one million energy saving bulbs. KfW, as part of the loan agreement, is offering a grant of about N$30 million for the provision of solar water heaters to poor households in the country. The two projects, if implemented, are expected to reduce the national power usage by 40 megawatt.

KfW’s bone of contention, allegedly supported by the NamPower management, is the utility’s board of director’s decision to change the BEE provision for companies tendering to participate in the project. The board decided to push the BEE provision up from 10% to 20%. The move irked the management who reported to the board that the awarding of the tender was already in progress.

KfW also wrote to NamPower threatening to cancel the funding deal.

The Namibian has seen the letter dated 21 July 2014, in which KfW states that NamPower’s revised BEE policy “may possibly be in violation of KfW’s procurement policy.” The letter further states that those receiving KfW funding should abide by its procurement guidelines. Although stating that the German-based development bank has no problem with BEE, it disregards the policy because Namibia has no BEE law. It also states that KfW was opposed to the 20% BEE provision in the tender because Namibia does not manufacture light bulbs and that the bulbs will have to be sourced elsewhere.

Jan Martin Witte and Claudia von Fersen co-signed the letter addressed to NamPower CEO Paulinus Shilamba.

Shilamba could not be reached for comment.

Interestingly, the NamPower management wrote a report to the board which also highlighted the same concerns as KfW and recommended that the company not implement the 20% BEE threshold because it could result in KfW withdrawing the funding. Over the past three months the NamPower board has been on a move to change the company’s approach to awarding contracts to black-owned companies. This comes after the board learned that the company’s internal tender committee had been ignoring BEE companies in terms of tender allocations. Statistics indicate that so far this year NamPower awarded contracts worth over N$880 million out of which only N$13 million – about 1,5% of this amount – went to BEE bidders.

In 2013 the company had tenders worth about N$413 million, of which only N$1,6 million – about 0,4% of the total – was allocated to BEE bidders. In 2012 the company issued N$453 million in tenders, of which N$97 million, 21,5% of the total, went to BEE companies. This was largely because that year the company awarded an N$80 million coal tender to a BEE company.

Meanwhile, High Court Judge Collins Parker will rule on 17 September on an urgent application he heard on Friday, to stop a tender from being implemented pending a review of the tender process. The tender is being challenged after the NamPower board chose a company based on BEE, decentralisation and rural development, in addition to its technical qualification rather than its bidding price.

Source : The Namibian