HomeIndustry SectorsFinance and PolicyNamibia appears to be hedging its bets on Kudu gas to power...

Namibia appears to be hedging its bets on Kudu gas to power project

Paulinus Shilamba,
Managing Director,
18 May 2012 – According to a report in the Namibian partners in the development of the Kudu gas project complained to the board of NamPower during a recent meeting after it emerged that NamPower no longer want to commit funds for the development of the estimated US$1.85 billion gas to power project.

The Namibian reported that it understands that NamPower’s managing director Paulinus Shilamba told the meeting that the power utility wants to refocus its commitment and use its resources on a 300 MW power station to be developed in the Erongo Region. The new power station is estimated to cost about US$80 million.

NamPower is understood to have already advertised for pre-qualification tenders for the Arandis coal fired power station. Those who represented stakeholders in Kudu at the meeting, including mines and energy minister Isack Katali, National Petroleum Corporation (Namcor), UK Tullow Energy and Japanese Itochu, were allegedly caught off guard and angered by the lukewarm commitment by NamPower to the Kudu project. The situation resulted in Shilamba allegedly being put on the firing line by all parties including Katali who reminded NamPower that Kudu was a government project directed by cabinet.

Katali was apparently surprised by the fact that NamPower has taken the coal power station as the top priority. He reportedly gave instructions to NamPower in the meeting to recommit itself to Kudu as it was a cabinet directed project.

Following the half-hearted commitment by NamPower to Kudu, the foreign partners are questioning the viability of the Kudu project in the face of the 300 MW coal fired power station.
Kudu is expected to generate about 800 MW of electricity, half of which is supposed to be consumed locally while the other half is for foreign usage.

Katali told The Namibian that both the Kudu and Arandis projects should be undertaken in parallel to each other. He said there could be delays for Kudu but it cannot be suspended entirely. “I have given instructions that both projects be pursued. I still think it will be suicidal to just rely on Kudu, but with limited resources if it takes off the ground we may delay the coal station and concentrate on Kudu,” Katali said.

According to Katali the coal fired power station and Kudu project would still be viable given the booming local economy especially in the mining industry and the country’s industrialisation drive. “Zambia’s copperbelt has already made commitment that it will take up about 300 MW of the Kudu power and then we are then only left with 100 MW for South Africa,” Katali said.