Namibia well placed for green hydrogen - Hyphen
Hyphen Hydrogen Energy (Hyphen), Namibia’s partner in its quest to develop its green hydrogen project, says the country is well-positioned to successfully execute the mega-project, which is seen as an integral part of the world’s decarbonisation efforts.
This is the view of Hyphen’s chief executive officer, Marco Raffinetti, when he gave an introductory presentation to the media yesterday aimed at providing information on the project.
"Namibia has the relevant traits that the partners for this project are looking for. Namibia holds a competitive advantage in natural resources, geopolitical stability and democratic values. However, as it is a developing country, it lacks the financial resources to kick-start the industry and would be reliant on foreign direct investment," Raffinetti told the media.
Reap the benefits
Raffinetti indicated that there has been great interest in the project, with several letters of intent or memoranda of understanding signed with a number of potential clients already.
With Namibia owning a 24% equity interest in the project, government has in recent weeks faced strong criticism from local advocacy bodies, with many claiming that the country ought to have received a bigger share of the green hydrogen pie.
Raffinetti highlighted that Namibia will reap the necessary benefits from the project despite the equity it holds.
"We have taken a deliberate decision to place great emphasis on socioeconomic development. For now, Namibia takes no risk through expenditure; however, once we reach the validation phase, Namibia will have to put in the funds to pay for its share into the project. It will then have to decide whether it wants to sell its share or raise the money elsewhere," he said.
Investor friendly
On its part, government said the proposed equity participation at cost, as opposed to free equity or a profit share, has the advantage that it does not increase the cost of equity capital for investors.
"All else being equal, if Namibia had demanded a 24% free equity stake, incoming investors would have to generate a 33% higher return to achieve the same outcome, and consequently Namibia’s hydrogen projects would be more expensive, and less attractive to investors. There is a large amount of competition between countries to grow their own hydrogen industries, with a lot of competing countries offering billions of Euros in subsidies to attract investors," Namibia’s green hydrogen commissioner James Mnyupe said last week.
Mnyupe also indicated that: "Thanks to Namibia’s strategic partnership with the European Union member states, the Dutch government, via their development institution, Invest International, has given a grant of €40 million (±N$850 million) to government to seed a new fund, the SDG Namibian One Fund, that will facilitate the de-risking of new hydrogen projects in Namibia."
This grant funding, he said, has enabled government to take up its equity stake in Hyphen and other projects and / or hydrogen-related infrastructure with no recourse to the national fiscus or Namibian tax payers.
Raffinetti said green hydrogen will be a determining factor in whether the world meets its decarbonisation targets or not. According to him, there is a need for 550 million to 660 million tonnes of green hydrogen per year by 2050.
Amidst the hype of transforming the green hydrogen dream into reality, government finds itself racing against time to effect the necessary amendments to existing legislation and establish sector-specific legislation to regulate the budding industry.
This is the view of Hyphen’s chief executive officer, Marco Raffinetti, when he gave an introductory presentation to the media yesterday aimed at providing information on the project.
"Namibia has the relevant traits that the partners for this project are looking for. Namibia holds a competitive advantage in natural resources, geopolitical stability and democratic values. However, as it is a developing country, it lacks the financial resources to kick-start the industry and would be reliant on foreign direct investment," Raffinetti told the media.
Reap the benefits
Raffinetti indicated that there has been great interest in the project, with several letters of intent or memoranda of understanding signed with a number of potential clients already.
With Namibia owning a 24% equity interest in the project, government has in recent weeks faced strong criticism from local advocacy bodies, with many claiming that the country ought to have received a bigger share of the green hydrogen pie.
Raffinetti highlighted that Namibia will reap the necessary benefits from the project despite the equity it holds.
"We have taken a deliberate decision to place great emphasis on socioeconomic development. For now, Namibia takes no risk through expenditure; however, once we reach the validation phase, Namibia will have to put in the funds to pay for its share into the project. It will then have to decide whether it wants to sell its share or raise the money elsewhere," he said.
Investor friendly
On its part, government said the proposed equity participation at cost, as opposed to free equity or a profit share, has the advantage that it does not increase the cost of equity capital for investors.
"All else being equal, if Namibia had demanded a 24% free equity stake, incoming investors would have to generate a 33% higher return to achieve the same outcome, and consequently Namibia’s hydrogen projects would be more expensive, and less attractive to investors. There is a large amount of competition between countries to grow their own hydrogen industries, with a lot of competing countries offering billions of Euros in subsidies to attract investors," Namibia’s green hydrogen commissioner James Mnyupe said last week.
Mnyupe also indicated that: "Thanks to Namibia’s strategic partnership with the European Union member states, the Dutch government, via their development institution, Invest International, has given a grant of €40 million (±N$850 million) to government to seed a new fund, the SDG Namibian One Fund, that will facilitate the de-risking of new hydrogen projects in Namibia."
This grant funding, he said, has enabled government to take up its equity stake in Hyphen and other projects and / or hydrogen-related infrastructure with no recourse to the national fiscus or Namibian tax payers.
Raffinetti said green hydrogen will be a determining factor in whether the world meets its decarbonisation targets or not. According to him, there is a need for 550 million to 660 million tonnes of green hydrogen per year by 2050.
Amidst the hype of transforming the green hydrogen dream into reality, government finds itself racing against time to effect the necessary amendments to existing legislation and establish sector-specific legislation to regulate the budding industry.
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