NamPower projects not viable: BMI

28 Jan 2015 12:49pm
WINDHOEK, 26 JAN (NAMPA) – An international report is pessimistic about NamPower’s power-generation projects, claiming that consumption will far outstrip supply, which could result in interrupted load-shedding and blackouts.
The Business Monitor International (BMI) Report, an independent provider of country-risk and industry analysis, warned last week that Namibia is at a critical juncture in the development of its electricity sector.
BMI is a Fitch Group company, operating globally from offices in London in the United Kingdom, New York in the United States of America, as well as in Singapore and South Africa.
As part of an annual Surplus Sales’ Agreement, the power utility NamPower is currently exporting electricity to Botswana and South Africa because the Ruacana Hydropower Station is generating at full capacity (330 MegaWatts).
However, in its ‘Namibia Power Report’, the BMI claimed that Namibia is currently facing a severe crisis in the provision of power due to an extreme reliance on a dilapidated hydropower system, which is vulnerable to breakdown and drought, and on imported electricity from South Africa.
Various NamPower projects are in the pipeline, which will radically transform the country's ability to generate electricity during the course of this decade.
BMI made specific reference to the Kudu gas-fired power station project and the recently-announced Arandis power station project, as well as further smaller investments in hydropower and solar energy.
“However, caveats apply. Most of these projects will not bear fruit until the latter part of the decade, meaning consumption will far outstrip supply until then, and result in periodic load-shedding and blackouts.
In addition, attracting new investment, especially in renewables, is vulnerable to serious deficiencies in the structure of the market, which lacks a robust regulatory framework and is dominated by an inefficient State-owned provider which excludes private competitors,” it stated.
BMI’s key forecasts include power-generation increasing by over 500 per cent over the 10-year timeframe driven by the development of thermal and gas-fired power, reaching 12.4 terawatt-hours (TWh) in 2023.
The report also predicted that power consumption will rise to 6.6 TWh by 2023, and warned that this implies considerable potential for the export of electricity towards the end of the forecast period.
“Transmission and distribution losses in 2015 will be high - at 24.9 per cent of output - due to theft and the poor state of the electricity grid, but will gradually decline in percentage terms over the 10-year forecast period,” it added.
BMI, however, commended the power utility for making progress in developing domestic renewables’ capacity.
Meanwhile, NamPower spokesperson Monica Nashandi vowed that no serious power supply disruptions are envisaged during the next four to five years.
“The company has had the foresight to put adequate measures in place through its Short-term Critical Supply initiatives (one to five years) to mitigate potential shortages,” she was quoted as saying in a media statement issued last week.
These measures include demand-side-management (DSM); the Van Eck power station’s refurbishment; Runners’ replacement at the Ruacana Hydropower Station; as well as negotiations of power- purchase agreements (PPAs) with regional utilities and independent power producers (IPPs).