Drastic power hikes looming

NAMIBIA can brace itself for a hike in electricity costs sooner rather than later, with the days of cheap power imports from South Africa set to end next month.

A new power-supply agreement with South African power utility Eskom comes into effect on July 1, at an inevitable increased price to bulk supplier NamPower and, as a result, the ordinary consumer. Yesterday NamPower’s new Managing Director, Paulinus Shilamba, said the terms of the new agreement were “less favourable” than the current one and coupled with reduced security of power supply as South Africa grapples to meet its own power needs.The current 10-year contract with Eskom has allowed Namibia to import up to 50 per cent of its power needs but still keep its prices among the cheapest in the region and the world.”Namibia has been enjoying very, very cheap energy.There is no other way to do it than to hike the price,” said Shilamba in his first meeting with the media since taking office.South Africa’s electricity regulator has ordered that Eskom no longer subsidise the cost of electricity to international customers like Namibia, NamPower’s Chief Technical Advisor, Reiner Jagau, said.”The cost to date that we are used to is definitely a thing of the past,” Jagau warned.Neither he nor Shilamba could not say when, or by how much, electricity tariffs would go up.”The current power situation is more of a challenge than a crisis.This is a clear indication of the economic activities taking place in the region and it beckons intensified efforts to meet the challenges head on,” he said.Shilamba said another coal-fired power station could be in the offing to meet Namibia’s power needs, should NamPower’s longer-term projects such as Kudu Gas not get off the ground within the set timeframes.Shilamba took over the reins of the power utility four weeks ago and said yesterday that he has been very busy learning and discussing a number of issues the company is dealing with.These include finding local power-supply sources to meet Namibia’s needs in the short, middle and long term.”[Namibia’s] three power stations are not in the position to service our peak demand, which is about 500 MW, hence our efforts to embark on other measures to manage the load profile of NamPower.These include … the implementation of the load-shedding policy and energy efficiency measures,” said Shilamba.Despite NamPower saying that ever-escalating fuel costs, especially of coal and diesel, have led to the company incurring losses in running the Van Eck and Paratus power stations, it said it would conduct feasibility studies into another large coal-fired power station along the coast.Should push come to shove, NamPower is even considering setting up a small-peaking plant at its Paratus Station at Walvis Bay which would also run on either diesel or gas to meet Namibia’s increasing power demands, estimated at an annual increase of about three per cent and up to seven per cent in the northern regions.Such a plant, the company says, can be set up and running within a year.The Kudu Gas project is currently running behind schedule.According to its project manager, Margaret van Der Merwe, this is because of matters relating to the financial agreements for buying the gas that need to be ironed out with the project’s major partner, Tullow Plc.Tullow wants its return to be paid in US dollars.This process, she said, was taking longer than expected, but it was important that the matter was handed properly before the project entered the next phase of finding financing for the US$1 billion project.The project implementation date has now been extended to 2010, two years later than originally planned.Next week NamPower plans to launch a public awareness campaign to inform consumers about its load-shedding policy and the introduction of energy-efficient measures in efforts to encourage the general public to use electricity more sparingly and efficiently.”We are monitoring the situation very closely, every hour, every minute,” said Shilamba.”If it comes to the worst to satisfy demands we have agreed to start load-shedding.But these measures are a last resort.We will only go that route if things go really bad.”Shilamba said a meeting of the Permanent Joint Technical Commission on the Baynes Hydropower Project on the Kunene River has been called to revive the project as soon as possible.”In times like these the role of renewable energy sources of energy cannot be ruled out of the power-supply equation.NamPower is therefore currently looking at all neutral energy resources as a means for power generation, including wind, invader bush and solar energy, to complement the current generation facilities,” said Shilamba.Yesterday NamPower’s new Managing Director, Paulinus Shilamba, said the terms of the new agreement were “less favourable” than the current one and coupled with reduced security of power supply as South Africa grapples to meet its own power needs.The current 10-year contract with Eskom has allowed Namibia to import up to 50 per cent of its power needs but still keep its prices among the cheapest in the region and the world.”Namibia has been enjoying very, very cheap energy.There is no other way to do it than to hike the price,” said Shilamba in his first meeting with the media since taking office.South Africa’s electricity regulator has ordered that Eskom no longer subsidise the cost of electricity to international customers like Namibia, NamPower’s Chief Technical Advisor, Reiner Jagau, said.”The cost to date that we are used to is definitely a thing of the past,” Jagau warned.Neither he nor Shilamba could not say when, or by how much, electricity tariffs would go up.”The current power situation is more of a challenge than a crisis.This is a clear indication of the economic activities taking place in the region and it beckons intensified efforts to meet the challenges head on,” he said.Shilamba said another coal-fired power station could be in the offing to meet Namibia’s power needs, should NamPower’s longer-term projects such as Kudu Gas not get off the ground within the set timeframes.Shilamba took over the reins of the power utility four weeks ago and said yesterday that he has been very busy learning and discussing a number of issues the company is dealing with.These include finding local power-supply sources to meet Namibia’s needs in the short, middle and long term.”[Namibia’s] three power stations are not in the position to service our peak demand, which is about 500 MW, hence our efforts to embark on other measures to manage the load profile of NamPower.These include … the implementation of the load-shedding policy and energy efficiency measures,” said Shilamba.Despite NamPower saying that ever-escalating fuel costs, especially of coal and diesel, have led to the company incurring losses in running the Van Eck and Paratus power stations, it said it would conduct feasibility studies into another large coal-fired power station along the coast.Should push come to shove, NamPower is even considering setting up a small-peaking plant at its Paratus Station at Walvis Bay which would also run on either diesel or gas to meet Namibia’s increasing power demands, estimated at an annual increase of about three per cent and up to seven per cent in the northern regions.Such a plant, the company says, can be set up and running within a year.The Kudu Gas project is currently running behind schedule.According to its project manager, Margaret van Der Merwe, this is because of matters relating to the financial agreements for buying the gas that need to be ironed out with the project’s major partner, Tullow Plc.Tullow wants its return to be paid in US dollars.This process, she said, was taking longer than expected, but it was important that the matter was handed properly before the project entered the next phase of finding financing for the US$1 billion project.The project implementation date has now been extended to 2010, two years later than originally planned.Next week NamPower plans to launch a public awareness campaign to inform consumers about its load-shedding policy and the
introduction of energy-efficient measures in efforts to encourage the general public to use electricity more sparingly and efficiently.”We are monitoring the situation very closely, every hour, every minute,” said Shilamba.”If it comes to the worst to satisfy demands we have agreed to start load-shedding.But these measures are a last resort.We will only go that route if things go really bad.”Shilamba said a meeting of the Permanent Joint Technical Commission on the Baynes Hydropower Project on the Kunene River has been called to revive the project as soon as possible.”In times like these the role of renewable energy sources of energy cannot be ruled out of the power-supply equation.NamPower is therefore currently looking at all neutral energy resources as a means for power generation, including wind, invader bush and solar energy, to complement the current generation facilities,” said Shilamba.