A Review of the Nigerian Energy Industry

Namibia does not need long-term PPAs, says Power Ulility

Zimbabwe’s President Robert Mugabe

27 November 2013, Windhoek – Namibia’s power utility, NamPower, yesterday rubbished reports by a local newspaper that it had opted for a Power Purchase Agreement (PPA) with Agrekko Mozambique at the expense of a cheaper PPA offered by Gigawatt, a South African based company also operating in Mozambique.

NamPower’s Managing Director, Paulinus Shilamba, yesterday said load shedding, which could have severe consequences for the national economy, would not have been avoided since June this year if the utility’s board and management did not take the decision to timeously conclude the 90MW Agrekko deal.

“NamPower does not need long-term PPA’s. On the other hand, the two to three year Agrekko mid-merit supply agreement fitted our requirements perfectly and the cost thereof was found to be comparable with similar agreements in the region,” said Shilamba. “This article is extremely misleading and lacked factual truth. NamPower’s business of power supply is important to the economy and social development of our country and the spreading of such incorrect information can be very harmful. Such irresponsible reporting threatens NamPower’s integrity and can shake Namibia’s investor confidence and severely impact on the national economy,” continued Shilamba.

He explained that it became clear by October 2012 that the security of electricity supply in Namibia could have been compromised mainly due to the drought and Eskom’s inability to provide firm supply if an additional source of supply was not confirmed. He said that NamPower only had two options, namely the Agrekko option or emergency diesel generators.

Said Shilamba: “The Gigawatt option was not considered as it could only be commissioned later in 2014. Furthermore, the Gigawatt offer would have compromised the viability of the Kudu project as it was based on the 100MW, 20-year long-term base load PPA and hence it was not supported at that point in time.”

“As you are aware, our national mandate as a power utility company is to deliver uninterruptible power supply services to our customers and the nation at all times. We have successfully managed to do so in the past and despite the current local and regional power supply challenges we are determined to continue doing so today and into the future,” remarked Shilamba.

NamPower continues to negotiate new PPAs with neighbouring countries to secure Namibia’s power supply. Negotiations are now at an advanced stage for the import of an additional 100MW from Zesco (Zambia), 100MW from EDM (Mozambique) and 50MW from Zesa (Zimbabwe). Shilamba also yesterday confirmed that the PPA with Zesa, which was coming to an end this year, has now been extended for another year until the end of 2014.

During yesterday’s media briefing Shilamba also dismissed a report by a weekly newspaper that NamPower has decided to invest N$1.8 billion in the rehabilitation of the Harare and Bulawayo power stations in Zimbabwe. “This statement is factually incorrect and misleading. It is disheartening at times when, despite being presented with the facts, some of you rather report otherwise,” noted Shilamba. He explained however that NamPower has identified a business opportunity in Zimbabwe which still needs to be decided on after a due diligence process. “Only after the investigations have been completed shall we be able to determine whether this option is viable or not and whether to invest or not. We are also not aware of where the figure of N$1.8 billion originates from as the cost will only be known after the investigations,” said Shilamba.

– New Era

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