Exclusive interview with Mr Fessor Mbango, CEO of Erongo RED distribution company in Namibia, an invited and confirmed participant of the Utility CEO Forum at the upcoming African Utility Week in Cape Town from 15-17 May.
“Although Namibia currently depends on its neighbours for the bulk of its energy needs, the country has opportunities to become a key energy player on the continent with its abundant resources such as uranium, gas, wind and solar.”
Let’s start with some background on Erongo RED, there is a proud history there.
Erongo RED, as the Erongo Regional Electricity Distributor Company (Pty) Ltd is known in common parlance, was established in 2005 with a mandate to distribute and supply electricity to consumers throughout the Erongo region, as well as to connect as many new users to the network as possible, in accordance with Government’s 2030 development goals.
The company was formed by merging a number of electricity suppliers and distributors in the region, namely the Arandis Town Council, Henties Bay Municipality, Karibib Municipality, Municipality of Walvis Bay, Omaruru Municipality, Swakopmund Municipality, Usakos Municipality, as well as the Erongo Regional Council and NamPower as the regional and national distributor of electricity. Each of these distributors is a shareholder of Erongo RED.
The drive to consolidate the Namibian electricity distribution industry is a Government initiative motivated by the policy drivers embodied in the 1998 White Paper on energy policy. A key motivating factor behind this drive was the deterioration of electricity distribution assets in small towns and rural areas which were not properly maintained due to increased economic pressure on local authorities.
The consolidation was carried out to pool human resources and operational capital to provide a stable supply of regionally available and affordable electricity through economies of scale.
The company carries distribution and supply licenses which are valid until 2030. Aside from its main distribution business, Erongo RED also owns and operates a 220-kilowatt wind generator at “Mile 7” near Walvis Bay. This asset was funded by a grant from Danida (Royal Danish Embassy) and was installed in 2005.
Erongo RED operates under the fixed regulations of the Electricity Control Board of Namibia and it owns and manages the electricity distribution network in Erongo Region. Since becoming operational in 2005, Erongo RED has concentrated on the development of the company towards self-sufficiency and to streamline operating functions and processes. Erongo RED now sells electricity at a price which reflects the actual cost of distribution and has widely established itself in the region. The company’s focus has now shifted to the refinement of the business, extending access to electricity, improving customer service and further developing sustainable operations.
What does your role entail?
My role at Erongo RED is all-encompassing and it includes ensuring the development and execution of the company’s short and long term strategic objectives with a view of creating shareholder value. I am also responsible for managing and implementing activities supporting economic growth as well as fostering stakeholder relations and ensuring that the company is in compliance with relevant legislations. Apart from the responsibilities above, I also act as a link between the board and executive managers. Other functions within the Office of the CEO includes, Human Capital, Company Secretary/Legal, Public Relations and Marketing and Internal Audit.
In addition to my role as CEO of Erongo RED, I am also serving on various Boards and Subcommittees namely Namibia Energy Institute as Advisory Board Member, Member of Curriculum Review Subcommittee at University of Namibia (UNAM) and Namibia University of Science and Technology (NUST). I am also member on the Executive Council of Association of Municipal Electricity Utilities (AMEU) in South Africa. Furthermore, I also serve as Vice Chairman of the Board of Association of Electricity Distribution Undertaking (AEDU) in Namibia and as a Chairman of Africa Utilities Technology Council (AUTC).
What projects that Erongo RED is currently involved in are you most excited about? How will this change people’s lives?
One of the primary responsibilities of any government and its agencies is to meet the basic needs of its citizenry. Erongo RED distributes electricity to customers on the grid and is committed to connecting a growing number of households, thereby improving the lives of more and more Namibians in the Erongo Region.
To ensure that its customers continue to enjoy a beneficial experience through accessible electricity, Erongo RED has established a number of initiatives such strategic bulk upgrade, rural and peri-urban electrification as well as introducing cutting edge technology to improve our operations. Through the “Power to the People” project we have connected over 1500 house with electricity in rural areas of Erongo region. This project is an ongoing initiative aimed at bringing electricity to areas that previously did not have access to electricity. We have just completed strategic bulk upgrade in Walvis Bay and we have since commenced with the bulk upgrade of Swakopmund. All this projects are aimed at ensuring that people have access to electricity.
What are the main challenges to the power industry in Namibia? And the opportunities for investors?
Although Namibia has the potential to become an economic driver due to its abundant resource and many other untapped resource, without robust electricity generation and distribution it is impossible to see rapid economic growth in Namibia. When it comes to electricity generation and distribution, Namibia is strolling far behind with almost 70% electricity being sourced from neighbouring countries. While getting more power to the people is what many governments desire, the cost of extending electricity grids to remote parts is still an expensive and slow exercise. With regard to the generation, often those that are at the helm of the decision making are reluctant to invest in electricity generation projects and this often puts the country at risk.
Furthermore, the cost of importing energy increases every year and this has a big impact not only on businesses but residential consumers alike. While renewable energy might be an alternative option to go, there are still challenges, especially in Namibia where the knowledge on renewable energy is still limited despite the best sun rays for solar energy generation.
There are huge opportunities for investors to invest in energy, especially generation as well renewable energy. With its abundant resources such as uranium, gas, strong wind velocity and solar, Namibia has opportunities to become a key energy player on the continent.
How important is renewable energy in Namibia’s energy mix?
Namibia currently depends on neighbouring countries for the bulk of its energy needs. Introducing renewable energy will play a significant role in reversing the current status by turning Namibia from a net importer to a net exporter and replacing foreign energy imports with locally generated electricity with added benefits of spin-off opportunities for SMEs.
As a company, we are also actively pursuing renewable energy. The company has a license for embedded power generation for a 220-kilowatt wind generator, which is the first network-connected wind generator in Namibia. In addition, 167 customers feed surplus energy back to the grid from their own roof-top solar generations.
Although we are not in the energy generation business, we are investigating the feasibility of utilising biomass technology at Swakopmund and Walvis Bay, wind generation as well as solar energy. We recently signed a Power Purchase Agreement with OLC Arandis as off taker of the solar energy generated at the plant. The company is also foreseeing increasing renewable footprint in the region to reduce over dependency as well as cost.
What is your vision for the sector?
At the moment, many companies in the industry are still reluctant to invest in the renewable energy because of the network instability that may result from integrating renewable energy into the grid. I want to see more studies and simulation done for the companies to have confidence in diversifying their energy supply. Of course, there are new operational and technical solutions that will assist companies in the generation and distribution sphere to integrate the renewable into the existing grid. That means that the existing grid should be flexible to avoid system instability.
Diversity of energy sources will promote sustainable energy and protects companies in the electricity generation and supply industry from market fluctuations and volatility. Namibia is blessed with abundant natural energy sources and it is time for all role players to explore these avenues to ensure energy security.
In Namibia, the Minister of Mines and Energy, Honourable, Tom Alweendo, announced the implementation of the recently approved National Integrated Resource Plan (NIRP) to reduce Namibia’s over-reliance on electricity imports from our neighbours. The NIRP is a 20-year development plan for Namibia’s Electricity Supply Industry, spanning the period between 2016 and 2035. It provides a projection of Namibia’s expected future electricity demand, and identifies the mix of resources required to meet the country’s electricity needs in an efficient and reliable manner at the lowest reasonable cost. The resources include alternative energy generation sources such as Concentrated Solar Power, Biomass, Solar PV and Wind Generation. I am confident that this plan we really stimulate the country’s electricity industry to become robust and meet national energy needs.
What are you most looking forward to at the CEO Forum?
When you are surrounded by four walls it is difficult to see things from a different perspective. But when you are in the midst of other leaders and listen to their perspective, you start to see things differently, you get inspired to see things from a new perspective. I am hoping to learn more from others in the industry at the CEO Forum but also share my expertise and contribute to the progression of the industry.
How important is it for utility executives on the continent to gather like this?
A contemporary Turkish playwright, novelist and thinker Mehmet Murat ildan once said “You will never attain wisdom without walking on different streets, without talking to different people, without reading different books, in short, without meeting with the things different in every aspect!” I believe being at the CEO Forum gives opportunity to learn from others as well as for me to impart what I know to others.