NamPower has halted Arandis Power’s 120MW Heavy Fuel Oil Power Project, citing that “circumstances have changed” and that Namibia no longer needs the additional 120 MW from the project.
The Windhoek Observer has seen a letter written on 19 October by NamPower board Chairperson, Kauna Ndilula, directed to Arandis Power Managing Director, Ezio Vernetti, in which she said that the power utility had resolved to cease any further engagement with Arandis Power on the 120MW power project.
The letter does not explain why the project had been put on ice, despite Namibia’s desperate need for additional permanent sources of low cost power generation capacity.
Namibia remains a net importer of electricity with about 68 percent of the country’s electricity needs imported from neighbouring countries.
Vernetti’s company had calculated that 120MW could be produced if NamPower had gone ahead with the project, powering about 230,000 households.
Under current laws, NamPower is the sole buyer of electricity generated in Namibia.
The Arandis Power project had the potential to bring stability to the national grid as it could have generated as much as 25 percent of the country’s electricity demand.
An official close to Arandis Power told the Windhoek Observer that NamPower had made a “big” mistake by dropping the project.
“Nampower sent us a letter three weeks ago that they are considering withdrawing the project. The only explanation they had was that circumstances have changed with regard to power supply demands in Namibia and that they no longer need the 120MW capacity anymore. I hope they change their mind because this is a big mistake,” the official said.
A Government source close to the matter raised concerns about NamPower’s ability and seriousness to have a base load power station in the short to medium term.
“They said ‘no’ to the project. Most of us are worried that NamPower does not have a plan regarding electricity generation in the country. NamPower last built a power station in the 1970s,” the Government source said.
No plan in place for power security
Nampower’s Vision 2030, Harambee Prosperity Plan (HPP) and the National Energy Policy, all call for Namibia to strive for strategic energy independence, a very critical concept to preserve and develop the country’s sovereignty and independence to avoid being at the mercy of other countries.
Among other negatives, the reliance on imports most of which are paid in hard currency, drains the Namibian foreign currency reserves.
Also with imported electricity, Namibia cannot dictate the price at which it buys. In the region, Namibia’s electricity consumption is very small compared to other countries and therefore the country does not have bargaining power on price.
Namibia imports 43 percent of electricity from Eskom alone.
Speaking to the Windhoek Observer this week, an energy expert close to Eskom said that Namibia cannot continue to rely on Eskom for energy forever.
“Today Eskom has excess power to sell (approximately 7000 MW of capacity while Namibia needs 600MW). While this may be attractive for Namibia today, we know that Eskom power plants are very old and will need to be replaced over the next 10 years in a context where Eskom does not have the money for such an investment.
“It is therefore foreseeable that the 7000MW excess will disappear. Namibia cannot bank on other countries’ energy strategy because when the shortage does occur, a new power plant cannot spring out of the blue; it takes 2-3 years to build a baseload power plant,” the expert said.
According to NamPower’s most recent Annual Report, drought and the high cost of imports contributed to a N$551 million loss before tax in 2016.
NamPower’s cost of procuring electricity went up by 33 percent last year to N$3.6 billion. A great portion of this money was used to pay for electricity imports.
Contacted for comment, NamPower Managing Director, Simson Haulofu, confirmed that they were no longer in talks with Arandis Power.
“Yes, we can herewith confirm that NamPower and Arandis Power have ceased engagements on the 120MW HFO unsolicited project as proposed by Arandis Power to NamPower,” Haulofu said.
He said the decision to stop further engagements on the project is primarily based on the changed circumstances in the demand and supply situation in Namibia.
In a previous interview with the Windhoek Observer, Haulofu vowed not to leave office without the construction of three new biomass power plants.
He said at the time that tenders regarding the three plants were already out for a 40MW biomass-fuelled power plant in the central area of Otjiwarongo and another 20MW power plant around the Otavi area.
A third 150 MW Concentrated Solar Power (CSP) plant will be built in the Arandis area near the coastal town of Swakopmund.
“I am currently pushing for at least two biomass power plants. I do not want to leave this desk without making it happen, as we are already hard at work progressing on two projects that we plan to tender around September this year- two huge base-load plants of about 60 megawatts.
“We plan on putting up a biomass power plant to harvest all the invasive alien species of bushes on farms. We have already selected the site, and done the environmental studies.
“We are hard at work progressing projects which we are going to tender around September this year. We should put one plant that is 40MW immediately, and then another one, which is 20 MW, will be built through a Public Private Partnership,”Haulofu said then.