Windhoek City wary about joining RED

THE City of Windhoek is “more than apprehensive” about joining a regional electricity distributor (RED) because numerous issues related to setting up such a body still have to be addressed.

“The establishment of a Central RED in its current form is not viable and will not be viable for our own situation in Namibia,” Dr Bjoern von Finckenstein, chairman of the City Council’s management committee told the monthly council meeting on Thursday. Regional electricity distributors have already been set up in the North (Nored), the central coast (ErongoRed) and at Otjiwarongo (CenoRed).A RED each for central and southern Namibia was supposed to be up and running by the middle of this year, but has not yet materialised.According to Von Finckenstein, the Windhoek municipality had invested heavily into its electricity provision over the past few years.”Now, when benefits are about to be harvested, we cannot just say ‘goodbye’, no.””What the Windhoek City proposes is consultations – in good faith – and meaningful discussions.We also suggest that economic audits of the existing REDs and the municipalities which joined them, should be conducted to evaluate the impact of REDs, learn lessons, improve or abandon the RED concept altogether if seen to be not workable for Windhoek or Namibia as a whole,” Councillor Von Finckenstein stated.He criticised the fact that the new draft electricity bill which is currently being debated in Parliament was tabled before any consultations were held with the Windhoek municipality prior to drafting of the bill.”It is unacceptable that the biggest and arguably the most important role-player, was not heard, not consulted.As the bill is at the moment, it is not acceptable to the City, its residents or businesses and not in the interest of Namibia at large,” Von Finckenstein told the Council.According to him, the Windhoek municipality would lose N$100 million in annual income, should a central RED be established.Government decided almost eight years ago to change the electricity supply industry to achieve a bigger separation with regard to generation, transmission and distribution.This includes setting up regional electricity distribution companies, which also handle the billing of customers as this responsibility has been taken away from municipalities.REDs also fix the electricity tariffs.Municipalities and NamPower are shareholders in a RED, which is to be run as a profitable company and profits are to be distributed among the shareholders.ErongoRed has hiked electricity tariffs enormously at the coast, but has yet to make profits.Interestingly, the coastal RED constructed several new offices for millions of dollars.The Swakopmund municipality lost out on its income from electricity which it used to derive from basic electricity charges per month, plus electricity consumed.The Electricity Control Board (ECB), which was established as a regulator seven years ago for the electricity sector, is critical of the ‘basic electricity charges’ municipalities are putting on the bills of residents.”The income derived from these charges are often used to cross-subsidise other sectors of municipalities which are making losses,” the ECB said in a recent position paper on REDs.”This is unfair to the consumers.”Until the end of last month, the basic electricity charge for households in Windhoek was N$149.Regional electricity distributors have already been set up in the North (Nored), the central coast (ErongoRed) and at Otjiwarongo (CenoRed).A RED each for central and southern Namibia was supposed to be up and running by the middle of this year, but has not yet materialised.According to Von Finckenstein, the Windhoek municipality had invested heavily into its electricity provision over the past few years.”Now, when benefits are about to be harvested, we cannot just say ‘goodbye’, no.””What the Windhoek City proposes is consultations – in good faith – and meaningful discussions.We also suggest that economic audits of the existing REDs and the municipalities which joined them, should be conducted to evaluate the impact of REDs, learn lessons, improve or abandon the RED concept altogether if seen to be not workable for Windhoek or Namibia as a whole,” Councillor Von Finckenstein stated.He criticised the fact that the new draft electricity bill which is currently being debated in Parliament was tabled before any consultations were held with the Windhoek municipality prior to drafting of the bill.”It is unacceptable that the biggest and arguably the most important role-player, was not heard, not consulted.As the bill is at the moment, it is not acceptable to the City, its residents or businesses and not in the interest of Namibia at large,” Von Finckenstein told the Council.According to him, the Windhoek municipality would lose N$100 million in annual income, should a central RED be established.Government decided almost eight years ago to change the electricity supply industry to achieve a bigger separation with regard to generation, transmission and distribution.This includes setting up regional electricity distribution companies, which also handle the billing of customers as this responsibility has been taken away from municipalities.REDs also fix the electricity tariffs.Municipalities and NamPower are shareholders in a RED, which is to be run as a profitable company and profits are to be distributed among the shareholders.ErongoRed has hiked electricity tariffs enormously at the coast, but has yet to make profits.Interestingly, the coastal RED constructed several new offices for millions of dollars.The Swakopmund municipality lost out on its income from electricity which it used to derive from basic electricity charges per month, plus electricity consumed.The Electricity Control Board (ECB), which was established as a regulator seven years ago for the electricity sector, is critical of the ‘basic electricity charges’ municipalities are putting on the bills of residents.”The income derived from these charges are often used to cross-subsidise other sectors of municipalities which are making losses,” the ECB said in a recent position paper on REDs.”This is unfair to the consumers.”Until the end of last month, the basic electricity charge for households in Windhoek was N$149.