Calls to kill Kudu

A pressure group has gone into battle with NamPower over the N$7.8 billion Kudu gas project, which now faces delays following an objection to its electricity generation licence. As part of the Consumer Advocacy for Electricity (CAE) objection, which was successful recently, it claimed, among other things, that Kudu had given rise to “harmful tariffs” that were already being felt by consumers. It wants the project halted and is calling for government to consider alternatives, including renewable energy. It also wants a mixture of private and State companies to be involved in electricity generation. The pressure group’s chairperson and former Electricity Control Board (ECB) chief executive officer Siseho Simasiku told Namibian Sun NamPower’s monopoly of the local electricity industry is dangerous and has the potential to threaten the country’s economy. He said NamPower’s refusal to engage broadly has resulted in consumers being charged upfront for projects, like Kudu, that are not guaranteed of implementation. This might result in a devastating downgrading of the country’s Sovereign and Corporate Credit Rating. NamPower earlier this year received approval from the ECB for a bulk tariff charge to municipalities and other distributors of N$1.25 per kWh - representing a 13.2% increase over last year. That figure is expected to rise to N$2 per kWh by 2019 - something the CAE said would spell disaster for Namibia’s international competitiveness. The escalating electricity costs are then passed on to the consumer. The CAE is co-chaired by Namibian Emerging Commercial Farmers Union (NECFU) member Ndahafa Nghifindaka. On September 3 it submitted a formal objection to the ECB against a NamPower application for an electricity generation licence for the Kudu project. This resulted in a decision by the ECB, on October 30, which will now see NamPower reapply for the licence. Simasiku called for more stakeholders to be involved in seeking a way forward in terms of Namibia’s electricity woes. “Twenty-plus years of independence is not a short period. A lot of research has been done, a lot of experience has been gained, so there are many who can play a part in helping the country form a stronger position,” Simasiku said. According to the group, the withdrawal of UK-based Tullow Oil and Japan’s Itochu from the Kudu project earlier in October was just one sign of the project’s doubtful future. Another, they say, is NamPower’s projected electricity tariff increases in the build-up to Kudu’s envisioned 2018 launch and beyond. In its objection to the Kudu licence, the CAE said: “Namibian users of electricity are in a very difficult position as they are bound, currently without any say in the matter, to simply bear the brunt of the tariffs created by projects in the electricity supply industry (ESI).” It continued: “Without a democratic voice and essential empowerment regarding which projects are approved, what electricity tariffs would arise from... projects, the consumer, the taxpayer… intensive energy users, business and industry, and even government, are effectively held hostage to decisions of the applicant, who runs a de-facto monopoly in the industry.” At a national energy forum organised by the Namibia Chamber of Commerce and Industry (NCCI) last week, Trade and Industry Minister Calle Schlettwein expressed similar sentiments. “Without affordable and reliable supply of energy, it is a daunting task to attract investment,” Schlettwein said, putting part of the blame on the current national electricity generation and distribution model, which sees NamPower as exclusive generator. The lack of dialogue about the industry, the CAE said, has resulted in unreasonable protection for NamPower projects like Kudu, Baynes and its Walvis Bay power plant. In the case of Kudu, the group said the project is projected to generate much more electricity than there are investment-grade buyers secured for. This, they said could drive the bulk electricity tariff as high as N$4, as validated by the Demand Factor Tariff Algorithm. “We must not believe that we cannot do without these holy cows. The correct procedure should be to keep it supply-driven, adding blocks as we go. Not working on a vast over-capacity that just drives up the tariff,” the CAE said. WINDHOEK DENVER ISAACS