Arandis Power to go ahead without government agreement

May 13, 2015, 9:04am

Arandis Power to go ahead without government agreement

Independent Power Producers (IPP) Arandis Power, will be going ahead with the development of the N$3.8billion Hybrid Power Plant, whether Government enters in an Implementation Agreement with the or not.
This comes after NamPower Managing Director, Paulinus Shilamba, said in an article written by The Villager earlier this year that the Power Utility will put some of its Independent Power Producers (IPP) projects on hold indefinitely, after government failed to guarantee a 180MW Arandis Power Plant.
Meanwhile, Arandis Power Managing Director, Ezio Vernetti affirmed in an interview with The Villager this week that should it be decided by Government not to enter into an IA with Arandis Power, despite it being standard procedure for power projects around the world, Arandis Power can implement the planned power plant and it (Arandis Power) would be satisfied with the structure proposed by NamPower in the 250MW tender which involves a World Bank Multilateral Investment Guarantee Agency  (MIGA) insurance cover for both debt and equity, adding, no Government IA is required.
Vernetti noted that Arandis Power needs absolutely no funding whatsoever from NamPower to kick-start, construct and operate its proposed project as it is fully funded as in position to implement its proposed project without NamPower money nor does the company require any funds from Government.
“We have read in the press that NamPower has made allegation that IPPs (including Arandis Power need GRN funding); this is simply a total misrepresentation of the truth. We have never requested any funding of Government or NamPower,” said Vernetti.
Vernetti added that regarding the 120MW proposal, Arandis Power is still on standby and still awaits NamPower’s lift of the “temporary suspension” of negotiation on this project which is completely different to the 250MW tender.
“We started formally engaging with NamPower on the 120MW Arandis project in 2008. In February 2014, when NamPower decided to launch the 250MW tender, they just informed us of the matter. In June 2014, NamPower further informed us in writing that they would “temporarily” suspend negotiations pending the conclusion of the 250MW tender,” said Vernetti.
Vernetti noted that in September 2013, Arandis Power fully negotiated a Power Purchase Agreement (PPA) with NamPower for the 120MW power plant and outstanding was only the issue relating to any possible Government backing of the PPA.
“Backing means Government backing NamPower in the remote event of a possible NamPower payment default in terms of the PPA, and as well as issues relating to Political Force Majeure, Extended National Grid Outage and matters of Change in Law which would jeopardize the IPP’s ability to repay back bank loans. These issues were at the time expected to be possibly addressed in a Government IA,” said Vernetti.
This comes at a time when Namibia needs to have its own source of power as the country is believed to face power shortages in 2016 and 2017 thus the 120MW Power Plant and other power plants by IPPs being of utmost importance. In addition, other challenges during that period will be the expiry of the bilateral agreement with Eskom in 2016, lower output from Ruacana due to lower level, and the Expiry of Skorpion and Eskom contract in 2017.
Despite NamPower having had plans to construct a 250MW Power Plant, the tender has been put on hold and until the 250MW power plant is approved by Government, NamPower is unable to say whether the 120MW power plant is approved or cancelled.
Vernetti said the 250MW has not yet been awarded to Xaris Energy as they understand that the negotiation is still not concluded.
He added that this in itself is in full contravention of NamPower’s self-imposed timelines, which were a condition for disqualification in the tender and tender conditions, that required negotiations concluded, and Financial Close (ie project implementation) reached by the end of January 2015.
Vernetti reiterated that the 120MW HFO+Solar Hybrid project is totally independent of the 250MW tender.
“We believe that the technical and economic rationale for our project’s existence is well demonstrated and justified. Our project is contemplated in Namibia’s long-term energy strategy as captured in the National Integrated Resource Plan (NIRP) which is approved by Cabinet,” said Vernetti.

by Charmaine Ngatjiheue