NamPower, Eskom in R7 billion power deal

By Timo Shihepo

WINDHOEK – Namibia’s power utility, NamPower, has signed a new power purchasing agreement with South Africa’s Eskom that would see NamPower forking out about R7.5 billion for five years.

As part of the agreement, Eskom will serve NamPower with a firm supply of 200MW and additional non-firm supply dependent on transmission capacity. The new power supply deal was signed last week in Maseru, Lesotho, on the sidelines of the 42nd Southern African Power Pool (SAPP) Executive Committee meeting.

The five-year deal does not have a fixed payment but will depend on the energy consumed by NamPower from Eskom during the period of the agreement, which is estimated to be at least R1.5 billion yearly. It means NamPower will be buying electricity according to the tariffs as set by National Energy Regulator of South Africa (NERSA), the equivalent of Electricity Control Board of Namibia (ECB).

“Eskom tariffs are approved by NERSA and the approved tariffs will apply to all the customers of Eskom and NamPower is no exception,” NamPower’s Corporate Communications and Marketing Officer, Rosa Nikanor, told The Southern Times.

Namibia imports about 60 percent of its electricity with about 40 percent of that estimated to come from South Africa.  Last year, Namibia imported R3 billion worth of electricity from neighbouring countries, according to the energy ministry.

The new agreement is also a one directional supply contract, which means NamPower cannot sell surplus to Eskom within the current deal. This is different from the previous agreement, which saw Namibia exporting up to 200MW of electricity to South Africa when the latter was experiencing load-shedding. Both NamPower and Eskom are, however, members of the Southern African Power Pool (SAPP) and through SAPP arrangements, NamPower may supply power to Eskom outside this agreement. “Yes it’s true. Should any need arise, NamPower can sell surplus to Eskom but it has to be outside the current deal,” said Nikanor.

In the SADC region, South Africa takes up about 84 percent of total consumption and more than 80 percent in power generation, four and three percent for Zambia and Zimbabwe, respectively, while the remaining is shared among other countries within the region which include Namibia, as per regional power status in Africa Report 2010.

Speaking at the signing ceremony, Eskom’s Interim Chief Executive, Matshela Koko, stated that many problems that South Africa’s power utility was facing in recent years have been dealt with and that the company is in a position to do business with neighbours.

“Eskom has turned around and we are now open for business with surplus capacity available to empower economic growth. This agreement provides energy security to Namibia and allows for economic development and growth in the country without electricity availability concerns.”

Berthold Mbuere from NamPower’s Energy Trading unit added that the power supply situation in Namibia and the region is currently under control. He said NamPower will continue to implement various efforts, including demand side management initiatives, to ensure that the delivery of electricity supply services to the national economy is carried out in a sustainable manner.

“With due consideration of the credibility and good standing of the relationship between NamPower and Eskom, NamPower is confident that the agreement will be beneficial to both companies and by extension, to our electricity customers,” he said.

Nikanor said it is significant that the region has good relations when it comes to power sharing.

NamPower has also power purchase agreements with Zimbabwe Power Corporation (ZPC) and Zambia Electricity Supply Corporation (ZESCO) of 80 MW and 50 MW, respectively. Namibia was in negotiations with Zambia to increase it to 100 MW at a cost of R26 million per month. The negotiations have now, however, stopped because Namibia is not at risk of load-shedding anymore.

April 2017
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