Prime Focus Magazine this month sits down with the newly appointed Managing Director of State Power utility NamPower, Simson Haulofu to get an understanding of his plans for the company and also way forward in unlocking the country’s power generation capacity Haulofu tells Prime Focus Managing Editor, Tiri Masawi, that the company will explore different avenues including continued cooperation with regional sister utilities to improve and sustain the country’s power needs.
Prime Focus: We understand you recently settled in your position at a full time basis after acting for quite some time?
Haulofu: Yes, I have been acting in the position since 15 October 2015. I applied for the position, went through the interview and was successful and was appointed in the position as of 1 July 2016
Prime Focus: What is your short to long-term plan in improving the profitability of NamPower?
Haulofu: You should remember that NamPower is a regulated company. The tariffs we charge is as approved by the ECB. We are thus not like your typical profit-driven company that can set prices as they deem fit and sell their services and products accordingly. The question you should rather ask is what we can do to become cost reflective…
Prime Focus: Creating a sustainable electricity generation plan for the country?
Haulofu: Due to mainly demographic and economic growth, the SADC region as a whole is currently faced with a shortage of power, a situation that will prevail for at least the next five years. In Namibia, the power supply deficit will continue to prevail until the commissioning of a new base load power station (capable of operating 24 hours a day and shut down only when routine maintenance is required or due to unforeseen circumstances).
To bridge the gap until an additional base load generation plant comes on-stream, NamPower in 2011 initiated the Short Term Critical Supply Project, which involves several short and medium term initiatives to meet the power supply challenges and to ensure security of supply to the country. These include:
The implementation of Demand Side Management initiatives which are aimed at cutting down on electricity consumption during peak hours;
Upgrading of existing generation sources;
Continuing to pursue both new Power Purchase Agreements and re-negotiating existing ones with neighbouring countries;
Engaging Independent Power Producers (IPPs) for the provision of electricity from renewable energy projects in the form of wind, solar PV and biomass, as well as a possible conventional thermal plant.
Implementation of the Renewable Energy Feed-In Tariff (REFIT) programme. The programme is designed to fast-track investment in renewable energy technologies by offering long-term contracts to renewable energy Independent Power Producers(IPPs), typically based on the cost of generation of each technology.
Implementation of Concentrated Solar Power (CSP) with storage and Biomass projects in the next three years
While striving to meet short-term challenges, NamPower remains equally focused on the medium to long-term picture, intensifying its work on supply options for the future, with the aim to meet the country’s electricity requirements from local generation (and export surplus electricity to the region). Chief among these is the development of the Kudu Power Project, off Namibia’s southern coast, which remains a strategic investment for national security of supply and will serve as a catalyst for the commercialisation of Namibia’s unexploited oil and gas potential.
Another long-term project is the Baynes Hydro Power Project, a joint project between Namibia and Angola, to be situated along the Kunene River, 200 km downstream of Ruacana. It is envisaged that the Baynes mid-merit/peaking power station’s capacity would be about 600 MW to be equally divided between the two countries and resulting in 300MW destined for Namibia.
Making sure that the company remains relevant to the SAPP:
NamPower joined the SAPP in 1999 to form part of a greater network and to benefit from a better cost structure, readily available power supplies and trans-national contracts. Seventeen years after NamPower joined the SAPP, we continue to be a member and there are no intentions of withdrawing from the pool. The utilities that form part of the SAPP are all faced with the problem of lack of adequate supply to meet the growing demand of electricity. The focus of all SAPP members now, including NamPower, is to plan and commission new generation and transmission projects as we strive to maintain adequate generation reserve margins and ensure security of supply.
Prime Focus: What do you think are the best options for Namibia in dealing with potential power challenges that are also being faced regionally in the future?
Haulofu: The ultimate is to put in place a base load power station by 2020 to meet the demand as explained earlier….
Prime Focus: Most parastatals in the world engage the market to raise funds for their key projects; will NamPower in the short to medium term go on both the domestic or international market to raise capital for projects?
Haulofu: NamPower has always explored various sources of funding for its key projects. The different sources of funding at our disposal are (a) using own cash reserves; (b) the NamPower Bond Programme - NamPower has a listed bond on both the NSX and JSE to the value of N$ 5 billion; and (c) Development Financial Institutions
So, if we raise funding, it will be from these sources. We are also quite keen to explore the domestic market. We envisage no international funding at this stage and we intend to raise funding in Namibian Dollar/South African Rand
Prime Focus: Ideally how much in general does the company need in the next five years or so to deal with the challenges of power generation?
Haulofu: A definite decision on generation options still needs to made and assessed. For now NamPower will not be aggressive in its fundraising campaign. We know however that clear communication is required to the market on our intentions and direction . What is probably more clear is that there will be bigger drive to partner with the private sector (IPPs.
Prime Focus: Do you think NamPower will thrive in future while working with independent power producers to improve power generation in future?
Haulofu: I believe so yes…
NamPower embraces the introduction of renewable energy projects in its supply mix. We are committed and open to work with IPPs that have viable renewable energy projects in order to complement conventional power generation sources with the aim to ensure that the goals and objectives of Vision 2030 are realised. We should however recognise the fact that intermittent generation (from renewable energy sources such as wind and solar) cannot sustain the economy of the country without conventional sources of energy – so there will always be a need for a mix of conventional/dependable energy and renewable energy sources
Prime Focus: In the past years corporate Governance has been a thorny issue in State Owned Enterprises (SOEs).What is you plan in making the implementation of good corporate governance the hallmark of your term in office?
Haulofu: NamPower is already following/upholding good corporate governance practices and has long set the standard for corporate governance among state owned enterprises in Namibia. We are committed to achieving high standards of corporate governance through self-governance principles developed through consultation with our board of directors which are applied transparently and consistently. I would also like to state that the company is proud to be led by a strong board of directors who provide the necessary guidance and monitoring to management teams and encourage strong moral codes that encompass honesty, transparency and fairness. NamPower is also fully compliant with all relevant legislation such as the SOE Governance Act of 2006.
Prime Focus: Does NamPower have long-term plans to continue subverting shortages of power in times of need with supply from sister utilities in the region?
Haulofu: Substituting you mean… As explained earlier, our aim now is to ensure that we put in place a base load power plant soonest… And also ensure the implementation of REFIT, CSP and Biomass projects….However in instances where sister utilities have access power and that power is being offered at a rate that is …. Compared to running our own generation plants, then of course we will buy from the region…
Prime Focus: What would you point out as the most pressing projects for NamPower in the next three years that need urgent attention?
Haulofu: Setting up a base load power plant, ensuring the implementation of Kudu Power Project, extending and maintaining and expanding our transmission network,(add on what Ernst Krige explained regarding us being depended on SA re 400kV line) becoming cost reflective, etc…
Prime Focus: NamPower is a company whose operation is highly technical and needs technical skills what do you think is the best plan in acquiring scarce skills for the company?
Haulufo: NamPower have for many years, afforded technical students with education and assistance in the various relevant fields whereby we retained all qualifying technical students each year and this yielded lots of benefits to us. Currently we don’t experience skills shortage within the company.
Prime Focus: What is the company’s corporate social responsibility plan for the next two years?
Haulofu: Alongside its huge capital investments to ensure security of power supply for the nation, NamPower has been equally committed to goodcorporate citizenship over the years, we take our a caring corporate citizen seriously. It is for that reason that the company has for years been investing a lot of money in our communities through its corporate-social investment arm, the NamPower Foundation. Projects which meet the criteria in the Foundation ‘s 5 focus areas (Education, Community Development, Health and Social Welfare, Capacity and skills developments, Job creation and entrepreneurship) remain the target of our CSI both in the immediate and distant future.
Prime Focus: As the key distributor of power countrywide, please tell the status of our generation plans countrywide?
Haulofu: Van Eck Power Station (thermal with an installed capacity of 120 MW). Commissioned between 1972 and 1976. Refurbished from 20… to 2016. Currently operational
Ruacana Power Station (Hydropower Station with an installed capacity of 347 MW, commissioned in 1978). Station fully operational. It is operated as a base load station during the rainy season (a base load station is one that is capable of operating 24 hours a day and is shut down only when routine maintenance is required or due to unforeseen circumstances).
Paratus Power Station (diesel power station with an installed capacity of 24 MW but currently de-rated to 12 MW), was commissioned in the 1970’s. This station is currently not operational. Its due for units replacement with the aim to increase its capacity to plus-minus 40MW
ANIXAS Power Station (diesel power station next to Paratus in Walvis Bay, with an installed capacity of 22.5 MW, commissioned in 2011). Operational when needed.
How has the drought affected power production capacity at the Ruacana Hydropower station?
The Ruacana Power Station is depended on the run-of-the river, which means the generation of power depends on the available river flow. The generation increases and decreases in line with the river flow. However, with the successful installation of new advance turbine runners at the power station, improvements in turbine efficiency now allow the station to generate more electricity even during low flow season.
There is a general perception that NamPower is not very keen to have many producers of alternative energy because they don’t want to lose the monopoly they enjoy what is your take on this?
That perception is flawed…As indicated earlier on, I would like to re-iterate that NamPower is committed and open to working with IPPs that have viable renewable energy projects in order to complement conventional power generation sources with the aim to ensure that the goals and objectives of Vision 2030 are realised.