City of Windhoek not keen to hand over electricity distribution to RED

THE City of Windhoek is still having reservations about handing over its control of electricity distribution to a regional electricity distributor (RED), despite the legal framework being overhauled.

In particular, the municipality is concerned that it stands to lose income of some N$8,4 million it usually receives in the form of a Value Added Tax refund for the purchase of electricity. The sale of electricity is the Windhoek Municipality’s biggest income earner.The City is also wary of the control the Electricity Control Board (ECB) will have to determine the surcharge the municipality will receive on the sale of electricity by the Central RED.The ECB will also determine whether and when the surcharge will be stopped.The surcharge will be levied to the consumer on the sale of electricity by the RED.At its monthly council meeting last week, it was agreed that officials return to the drawing board to make further amendments to the new Electricity Bill currently in draft format.The City of Windhoek also wants Central RED to take over its staff, who will be required to run the company, with all the benefits they accrued during their years of service with the municipality.ECB legal advisor Jacky Scholtz said yesterday that the City’s concerns had been noted and that they would be discussed at a next meeting to decide the way forward.The numerous legal loopholes the City of Windhoek found in the current electricity legislation for the transfer of its assets and the establishment of Central RED have delayed a Government plan to have all REDs established by the end of the year.This prompted Government to rewrite the current Electricity law, which at the earliest can only be tabled in Parliament in February.The Windhoek Municipality says the proposed law does not make provision for the losses it will suffer as a result of not receiving its VAT refund.The municipality says it is also “alarmed” that the ECB will get to decide how the municipality may use the money it will receive as a surcharge for electricity sold by the RED.”The ECB and not the Minister of Mines and Energy can decide how long the surcharge is to be maintained.It is therefore not a permanent replacement for the loss of electricity income.Worse still, there is no requirement that the ECB must consult with anybody whatsoever in deciding to stop the surcharge,” say council documents.In response, Scholtz says the ECB does not act unreasonably in deciding on tariff structures and that the issue of determining surcharges will be part of this function.She said a process of checks and balances were in place to ensure that tariffs were fairly determined.Scholtz was confident, however, that the City’s concerns would be ironed out during ongoing discussions between the municipality and the ECB.The City’s electricity distribution licence is only valid until December, and it is expected that it will apply for an extension of at least six months.The City will be the biggest shareholder of Central RED with nearly 80 per cent shares.The sale of electricity is the Windhoek Municipality’s biggest income earner.The City is also wary of the control the Electricity Control Board (ECB) will have to determine the surcharge the municipality will receive on the sale of electricity by the Central RED.The ECB will also determine whether and when the surcharge will be stopped.The surcharge will be levied to the consumer on the sale of electricity by the RED.At its monthly council meeting last week, it was agreed that officials return to the drawing board to make further amendments to the new Electricity Bill currently in draft format.The City of Windhoek also wants Central RED to take over its staff, who will be required to run the company, with all the benefits they accrued during their years of service with the municipality.ECB legal advisor Jacky Scholtz said yesterday that the City’s concerns had been noted and that they would be discussed at a next meeting to decide the way forward.The numerous legal loopholes the City of Windhoek found in the current electricity legislation for the transfer of its assets and the establishment of Central RED have delayed a Government plan to have all REDs established by the end of the year.This prompted Government to rewrite the current Electricity law, which at the earliest can only be tabled in Parliament in February.The Windhoek Municipality says the proposed law does not make provision for the losses it will suffer as a result of not receiving its VAT refund.The municipality says it is also “alarmed” that the ECB will get to decide how the municipality may use the money it will receive as a surcharge for electricity sold by the RED.”The ECB and not the Minister of Mines and Energy can decide how long the surcharge is to be maintained.It is therefore not a permanent replacement for the loss of electricity income.Worse still, there is no requirement that the ECB must consult with anybody whatsoever in deciding to stop the surcharge,” say council documents.In response, Scholtz says the ECB does not act unreasonably in deciding on tariff structures and that the issue of determining surcharges will be part of this function.She said a process of checks and balances were in place to ensure that tariffs were fairly determined.Scholtz was confident, however, that the City’s concerns would be ironed out during ongoing discussions between the municipality and the ECB.The City’s electricity distribution licence is only valid until December, and it is expected that it will apply for an extension of at least six months.The City will be the biggest shareholder of Central RED with nearly 80 per cent shares.