Nam in power crunch – Looking to the region for more supplies

 

Windhoek –Namibia’s power utility, Nampower, is increasingly looking into the Southern African market for electricity supplies, as local generation at key hydro power station, Ruacana, has fallen drastically due to a drought that has reduced water levels in the river.

Namibia’s power supply situation has also become critical these past few weeks after South Africa’s Eskom cut off supplies citing an emergency supply situation at home.

Nampower says negotiations are at an advanced stage to import 100 megawatts from Zambia, in addition to the 50 megawatt it is currently importing.

The utility is also negotiating for a 100-megawatt power purchase agreement with Mozambique’s utility EMD and 50 megawatts from Zimbabwe.

Shilamba said that Nampower is currently conducting due diligence, assessing the potential to invest in two thermal power stations in Harare and Bulawayo in return for guaranteed supplies.

The deal to expand generation capacity at Harare and Bulawayo thermal power stations, if it is reached, will replace a 2007 deal in which Nampower advanced Zimbabwean utility, ZESA, US$40 million to refurbish four units at coal-fired Hwange Power Station in return for a guaranteed supply of 150 megawatts for five years.

The Nampower-ZESA deal, which ended this year, has now been extended by another year to 2014, Shilamba said.

A net electricity importer, Nampower pins its hopes for electricity self-sufficiency on a US$1.3 billion Kudu gas-to-power plant, expected to be generate 800 megawatts by 2018.

“The power supply deficit and associated challenges will continue to prevail until the commissioning of a new base load power station in 2018,” Shilamba said.

“This will be particularly so as one of our suppliers, Eskom, will be experiencing serious challenges in managing the power supply situation in their own country. In the absence of a guaranteed import from Eskom until then it will indeed be challenging for Nampower to keep the lights on,” he added.

Nampower shut down coal-fired 120 megawatt Van Eck power station for a R300-million equipment upgrade last year.

Van Eck, situated on the outskirts of Windhoek, is expected to be on the grid by mid next year, Shilamba said.

Due to the severe drought gripping the country, generation capacity at key hydro power station, Ruacana, has fallen to around 90 megawatts from design capacity of 332 megawatts due to low water levels in Kunene River.

“The water flow at Ruacana is currently in the region of 60 cubic metres per second, compared to the 70 cubic metres per second required to operate one machine and 280 cubic metres per second that will be required to operate the whole power station at full load,” Shilamba said.

The utility will over the next five years embark on a R13-billion investment in generation capacity and transmission expansion programme over the next five years.

Nampower will finance R8 billion of the investment requirements from own cash reserves and raise the balance of R5 billion through bonds and debt, Shilamba said.

He said that Nampower plans to approach its traditional financiers, European Investment Bank (EIB), Germany Development Bank (KfW) and French Development Bank (AFD) for loans.

He added that the utility has previously secured financing from KfW and AFD.

“We are yet to work out how much do we borrow and raise on the market. We have our traditional financiers (EIB, KfW and AFD), we are going to approach them for loan financing,” Shilamba said.

The utility will spend R7 billion on an extensive transmission expansion plan for the entire country over the next five years, Shilamba said. Shilamba also said that work on a US$250 million electricity transmission interconnector linking power networks of Botswana, Namibia, Zambia and Zimbabwe will start in 2014.

Namibia will host the project, known as ZIZABONA, aimed at providing an alternative western transmission corridor to de-congest Southern Africa’s only existing central transmission corridor from Zambia, through Zimbabwe, Botswana and into South Africa, Nampower managing director Paulinus Shilamba said in a media briefing today.

The ZIZABONA project will be owned 20 percent equally by the four shareholding utilities and the balance of the equity will be split between South Africa’s Eskom and Zambia’s Copperbelt Energy Corp.

November 2013
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