Government plans to unbundle power utility, NamPower, into generation, transmission and distribution units, the Windhoek Observer has established.
Minister of Finance, Calle Schlettwein, and Public Enterprises Minister, Leon Jooste, told the Windhoek Observer this week that government had already set plans in motion to unbundle NamPower, but did not give any timelines when this would happen.
“There is a proposal in motion. It has been realised sometime back that unbundling is a necessity. We are now busy looking at it, but it is early days,” said Schlettwein.
The idea to unbundle NamPower comes from the belief by government that if more companies are generating electricity, prices will come down.
“It would allow other entities to generate power and sell it to the grid and that would put pressure on price if alternative generation methods are cheaper than what NamPower is using at the moment,” the finance minister said.
NamPower heavily relies on regional trading partners to meet the country’s energy demand. Of the total 4,610 GWh units of electricity in the Namibian system during 2017, 63 percent was imported.
Namibia’s main sources of power generation are the 120 MW coal-fired Van Eck power station in Windhoek, 24 MW diesel-powered Paratus power station at Walvis Bay, 22,5 MW ANIXAS diesel-powered station at Walvis Bay and the 332 MW hydro-electric Ruacana Power Station.
Jooste said the process to unbundle NamPower is a complicated process, which must be approached in a very calculated manner to avoid any undue consequences.
“Many other countries have concluded this process and there are numerous excellent examples to benchmark against,” he said, citing cases in the European Union, Australia and New Zealand.
The Public Enterprises minister said the motivation to separate the generation, transmission and distribution components is mainly to stimulate the liberalisation of the electricity sector by making it more attractive for the private sector to participate.
“In our case, NamPower is currently a virtual monopoly by design and the entire electricity cycle is under the authority of this one entity,” Jooste said.
He said the government actually took the first step when the Electricity Control Board as the regulator was established through the Electricity Act of 2007.
“The ultimate outcome of this complex process must be electricity security, affordable tariff levels for bulk and household consumers to enhance the competitiveness of Namibia and stimulate economic activity.”
According to its 2017 Annual Report, NamPower recorded revenues of N$5,8 billion in 2017 compared to N$5 billion in 2016.