Namibia braces for power deficit

Reiner Jagau, Nampower technical manager refused to disclose whether any deal had been signed to secure the loan from the European bank.

The Southern Times has it on good authority that the EIB is weighing the option of providing the loan to fund the project and negotiations could be concluded soon.

Jagau however told The Southern Times that there are up to 20 financial institutions willing to finance the Caprivi Interconnector but refused to disclose the names of the possible financiers saying it was still premature.

The Caprivi link is Nampower’s short term project meant to avert looming power outages in the coming two to three years.

The project is expected to be completed in mid-2009, Jagau said.

The Caprivi interconnector is a 970 kilometre DC HV DC line from Zambezi sub-station near Katima to Gaerus sub-station, situated between Otjiwarongo and Otjo.

Jagau refused to disclose the project cost saying the figure would vary with time. He however said that the cost runs into billions of Namibian dollars.

“We would have to find the best financing option for both Namibia and Nampower and at the moment we have some letters of intent from certain financial institutions but it’s premature to reveal any details,” Jagau said.

Namibia, like most countries in Southern African, does not have sufficient electricity generation capacity and relies on imports mainly from South Africa, which has however been experiencing power outages in the Western Cape province.

Government planners say that the power interruptions in South Africa, the region’s major supplier of electricity, have put pressure on Namibia to increase its own power generation.

South Africa is also expected to run out of excess generation capacity in 2007.

The Caprivi interconnector, Jagau said, is Namibia’s immediate solution to the looming power crisis following the postponement of the gas to power project, Kudu gas project to 2011.

“There are more than 20 financial institutions willing to fund the Caprivi link. Money is not a problem, it is the project itself, how it is packaged and its viability and hopefully by the end of the year, we would have sealed some deals,” Jagau said.

Nampower was assigned ratings of senior unsecured foreign currency BBB-by ratings agency Fitch, last year.

The power utility envisages using the link to get power from either Zambia, Mozambique, Zimbabwe and the Democratic Republic of Congo (DRC).

More importantly is the fact that Zambia is now interlinked with DRC, which means Namibia could easily import electricity from DRC via Zambia.

The link also cuts Namibia’s over-reliance on South Africa for electricity requirements.

Jagau said that funding for the project could run into billions of Namibian dollars adding that it is very complicated and the first of its kind in the region.

Southern African coutries are positioning themselves to import electricity from the DRC’s Inga hydropower station, which has the capacity to light up the whole region, if not the whole continent.

Namibia currently generates about 400 megawatts whilst the local peak demand has exceeded the local generation. Analysts say that it could rise to 500 MW as more mining companies come on stream.

“The South African situation has also changed and the recent failure of one of the two units at Koeberg (power plant) has emphasised the exposed position of Namibia in a situation where South Africa struggles to meet their own requirements….even with no generation setbacks, South Africa will soon not be able to accommodate neighbouring countries’ needs,” said an analyst at local securities firm, SSS.

In a related development, the World Bank announced this week that it is going to help finance the US$400 million revamp of the Inga hydropower station by year-end.

The bank’s electricity specialist, Phill-ipe Bennoit was quoted by news agencies as saying that the World Bank would provide half of the funding with the balance of the money expected to come from the Africa Development Bank and the EIB.

If completed, the revamp could double Inga’s output to 1 300 megawatts of power from 700 megawatts.

Some of the power would be exported to South Africa. “It will be about one and a half years before we start seeing beneficial impact,” Bennoit said.

October 2006
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