The NamPower Board was expected to decide this week whether or not the utility will sign a power purchase agreement with Arandis Power, a private company that is planning to set up a 120MW Heavy Fuel Oil power station in Arandis in the Erongo region.
Under current laws, NamPower is the sole buyer of electricity generated in Namibia and the project has a potential to bring stability to the national grid as it could generate as much as 25 percent of electricity demand.
The company calculates that 120MW could be produced, powering about 230,000 households.
“The NamPower board is busy deciding this week, by Friday, we should know what decision they will make,” said Ezio Vernetti, Managing Director and co-founder of Arandis Power in an interview.
Vernetti said his company will fund the project with 100 percent private money, adding that the project has been delayed, mainly from NamPower’s side due to ‘political decisions’ that have nothing to do with the actual technicalities of the project
“From our side we are ready to begin construction from April or May next year. The project is fully developed, designed and fully funded. We are just waiting for NamPower to make a final decision, in terms of the power purchase agreement,” he said.
“They should be deciding this week. So hopefully, they will decide what they want to do.”
Vernetti said as far as he was concerned, NamPower management want the agreement to be signed, but said “their hands are tied.”
It is expected that Standard Bank of South Africa, Standard Bank Namibia and the Development Bank of Southern Africa will be the main lead arrangers of the project finance debt component of the funding.
The Development Bank of Namibia will also contribute a significant tranche of the overall debt.
In addition, the Development Bank of Southern Africa and the Development Bank of Namibia are also contributing to the on-going project development activities through a dedicated Project Preparation Fund.
Project equity funders will be Nishati Investments, Stanlib Asset Management, Natura Projects Namibia, which is owned by previously disadvantaged Namibians and Wärtsilä Development and Financial Services.
Vernetti said with the growing feed from solar and wind plants into the national grid, Arandis Power will offer stability to the grid unlike renewable energy, which is dependent on weather conditions.
“Solar and wind are good because they are free of charge so to speak, but the bad thing is that they create a major problem on the national grid, when the wind is not blowing and or when the weather is cloudy. This creates instability. The Arandis Power Plant will help stabilise the grid because you can ramp it up or slow it down. It generates power 24/7,” he said.
Namibia has set itself an ambitious target of providing 70 percent of the country’s energy mix from renewable resources by the year 2020.
NamPower Managing Director, Simson Kahenge Haulofu, confirmed that Arandis Power was on the company’s board meeting agenda.
“Management is waiting for the board to make a decision. We will implement whatever decision is decided by the board. We want to conclude this issue, but we are waiting for answers from the board. There will be a board meeting soon,” he said.
Wärtsilä of Finland has been selected to build the plant.
In 2016, NamPower concluded 14 new Power Purchase Agreements (PPA) with Independent Power Producers (IPP) of 5 MW each in the renewable energy sector. The other 13 IPPs are expected to be fully operational before the end of 2017. The 2016 NamPower Annual Report said a new maximum demand of 608 MW/h (without Skorpion) and 667 (with Skorpion) was registered on 14 June 2016, higher than the previous record of 596 MW/h, registered on 2 June 2015.