13 May 2014 18:30pm
WINDHOEK, 13 MAY (NAMPA) Electricity tariffs will continue to increase above inflation at least until the 2019/20 financial year to ensure new investment in generation capacity, the Electricity Control Board (ECB)s Acting Chief Executive Officer Rojas Manyame has said.
In a media statement issued on Monday, Manyame explained that the increase is meant to reach the objectives stated in the White Paper on Energy Policy of 1998, that tariffs should reflect the long-run marginal cost of supply.
The ECB on Monday awarded NamPower approval to increase the bulk electricity tariff by 13.22 per cent from N.dollars 1.03 to N.dollars 1.17 - per kilowatt-hour (kWh) for the financial year 2014/15, effective 01 July this year.
Manyame noted that there is a substantial shortage of energy in the Southern Africa region at this stage and this situation will prevail over the next several years until enough new generation capacity has been built, thus putting pressure on energy tariffs in Namibia and all other countries in the Southern African Development Community (SADC) region.
He said the prevailing power shortages in the Southern African region underscore the need to streamline generation strategies to adequately address security of supply.
Namibia imports between 50 per cent to 70 per cent of its energy requirements from the region, depending on the availability of water at the Ruacana power station.
Although a number of power generation plants are planned, most of these plants will only start generating after 2016 due to construction lead times. These include the 30 MW solar photo voltaic plants currently being procured from Independent Power Producers (IPPs) through a tendering process; a 250MW plant to be developed jointly by NamPower and an IPP - an expression of interest has already been issued by NamPower for this plant; several IPPs pursuing different plant capabilities with NamPower; and the crucial 800MW Kudu power plant, he said.
Manyame noted that the current Zimbabwe Electricity Supply Authority (ZESA) contract will expire late this year, leaving Namibia with a capacity shortage of 150 MW.
He said alternative energy supply has been secured from the Zambia Electricity Supply Cooperation Limited (ZESCO) for the short to medium-term, however should there be any supply constraints from any of the suppliers, Namibia will have to buy energy on the emergency market from the region at emergency tariffs which are very high.
This will create price shocks to the Namibian economy if not planned for properly, Manyame said.