NamPower-Zim Power Deal Needs Thorough Analysis

MANY unanswered questions surround the announcement this week that Namibia’s power utility, NamPower, will pump between US$30 million and US$40 million into the renovation and expansion of the Hwange power station in Zimbabwe.

NamPower MD Paulus Shilamba said the money would come from the N$2 billion reserves that had built up in the parastatal’s coffers. Namibians are well aware of the fact that our future power supply is a burning question, with the various medium- and long-term options from nuclear to renewable energy being vigourously debated.They are also cognisant of the fact that Eskom’s supplies to Namibia are in jeopardy given the rising demand in South Africa itself, and that we need to look at alternatives.The basis and conditions of the loan for the refurbishment of Hwange in order to meet our short- to medium-term needs until local alternatives are put in place need to be fully spelled out to a Namibian public largely sceptical of the deal.A N$25 million loan to the DRC has never been repaid in full, and so taxpayers will want assurances that the deal with Zimbabwe is a properly managed commercial one with conditions and guarantees which show that this is not just a political solidarity gift to the Robert Mugabe regime in Zimbabwe, which is desperate for foreign currency.Shilamba did deal with some of the peripheral questions following the announcement of the agreement between NamPower and the two Zimbabwean parastatals.In terms of this deal, NamPower would advance the money on a loan basis and would in turn be supplied with 150 MW of electricity from the plant for five years, starting in January 2008.Some of the questions include: * While the loan will go a long way to depleting NamPower’s reserves, will this mean additional price hikes in addition to the already fairly steep increases over the past few years? * Will the money be paid over in a lump sum, or as and when refurbishment of the plant commences, and will this happen by means of approved tenders in that country? * What security, if any, is furnished in the event that complications or delays will jeopardise the start-up of the Hwange plant? * Will our loan essentially be subsidising the provision of electricity within Zimbabwe itself, since the plant is capable of generating 480 MW, of which initially only 40 MW will be taken up by Namibia? * If the loan is to be repaid by the provision of electricity to Namibia, will the pricing be favourable to us, and how comparable is this to the Eskom or other bills? We are also not completely clear on the terminology as a ‘loan AND power purchase agreement’.* The agreement would need to be properly managed from the outset, and terms and conditions clearly spelled out, hopefully free of any political considerations.For instance, we must still be able to get the electricity even if President Mugabe leaves office.* Namibians need to know that not only will this loan assist us in terms of our short-term power problems, but also that it will not result in more expensive electricity for the consumers of this country.We believe it is incumbent on Government and-or the parastatal in question to properly spell out all the implications of the deal to our taxpayers.Namibians are well aware of the fact that our future power supply is a burning question, with the various medium- and long-term options from nuclear to renewable energy being vigourously debated.They are also cognisant of the fact that Eskom’s supplies to Namibia are in jeopardy given the rising demand in South Africa itself, and that we need to look at alternatives.The basis and conditions of the loan for the refurbishment of Hwange in order to meet our short- to medium-term needs until local alternatives are put in place need to be fully spelled out to a Namibian public largely sceptical of the deal.A N$25 million loan to the DRC has never been repaid in full, and so taxpayers will want assurances that the deal with Zimbabwe is a properly managed commercial one with conditions and guarantees which show that this is not just a political solidarity gift to the Robert Mugabe regime in Zimbabwe, which is desperate for foreign currency.Shilamba did deal with some of the peripheral questions following the announcement of the agreement between NamPower and the two Zimbabwean parastatals.In terms of this deal, NamPower would advance the money on a loan basis and would in turn be supplied with 150 MW of electricity from the plant for five years, starting in January 2008.Some of the questions include: * While the loan will go a long way to depleting NamPower’s reserves, will this mean additional price hikes in addition to the already fairly steep increases over the past few years? * Will the money be paid over in a lump sum, or as and when refurbishment of the plant commences, and will this happen by means of approved tenders in that country? * What security, if any, is furnished in the event that complications or delays will jeopardise the start-up of the Hwange plant? * Will our loan essentially be subsidising the provision of electricity within Zimbabwe itself, since the plant is capable of generating 480 MW, of which initially only 40 MW will be taken up by Namibia? * If the loan is to be repaid by the provision of electricity to Namibia, will the pricing be favourable to us, and how comparable is this to the Eskom or other bills? We are also not completely clear on the terminology as a ‘loan AND power purchase agreement’.* The agreement would need to be properly managed from the outset, and terms and conditions clearly spelled out, hopefully free of any political considerations.For instance, we must still be able to get the electricity even if President Mugabe leaves office.* Namibians need to know that not only will this loan assist us in terms of our short-term power problems, but also that it will not result in more expensive electricity for the consumers of this country.We believe it is incumbent on Government and-or the parastatal in question to properly spell out all the implications of the deal to our taxpayers.