By Timo Shihepo
WINDHOEK – THE Namibia Power Corporation (NamPower) is still hopeful that the 884MW Kudu Gas power project will still commence despite government pulling out as guarantor for the project.
The news come at a time when Tanzania is making progress in producing gas-fired electricity. Recent discoveries of gas reserves off the coasts of Tanzania and Mozambique mean that Namibia risks being left behind and losing out on an opportunity to sell electricity from Kudu to the rest of the SADC region.
The Namibian government had signed R4.9 billion, as surety for the project that aimed to construct a gas-to-power plant, but pulled out last month due to the country’s escalating economic woes.
The 884MW Kudu Gas power project, as reported by The Southern Times last month, was put on ice as part of government’s austerity measures. Government also trimmed R5.5 billion or 10 percent off the 2016/17 national budget.
The new measures mean that National Petroleum Corporation of Namibia (Namcor), which was involved in the exploration part of the project, is stripped of 44 percent share of the upstream side of the project.
NamPower also stands to lose out most, as it might be forced to relinquish its 51 percent stake in the project, leaving private investors to fork out US$1.3 billion (R17.6 billion) if they are interested in running with the project.
Despite the headwinds, NamPower managing director, Simson Haulofu, remains optimistic. He recently told The Southern Times that NamPower is still regarding Kudu Gas as vital project for the country. Talking to The Southern Times from Tanzania, Haulofu said he was in that country to learn the ropes on how to handle a project the size of Kudu Gas.
“Tanzania has a similar project and we came here on a mission to learn from them so that we can apply that back home,” said Haulofu.
Minister of Mines and Energy, Obeth Kandjoze accompanied the NamPower delegation.
Tanzania is on a drive to end power shortages in the country with many new gas-fired power plants.
Last year, Tanzania initiated a US$1.33 billion project to pipe natural gas to its capital, Dar es Salaam.
The 532 km Mtwara-Dar es Salaam pipeline and gas processing plants, largely financed by a Chinese loan, is part of a plan to add about 2,000MW of gas-fired electricity by 2018. This will increase Tanzania’s generating capacity to 10,000MW by 2025.
The expanding capacity will help meet domestic demand, as the government connects more people to the national grid beyond the 40 percent who are connected now.
Tanzania is also hoping that it would save more than US$1 billion that it currently spends yearly on oil imports for electricity generation once the pipeline is complete.
The Southern African region is battling a capacity shortfall of 8,247MW but gas discoveries in Tanzanian and Mozambican waters have led to predictions that the region could become the world’s third-largest exporter of natural gas.
The region has also put plans in place that would result in 35,000MW of new generation capacity being commissioned between 2016 and 2022.
With the current installed generation the region has a capacity amounting to 58,000MW, but is still unable to meet its electricity needs.