On Monday, Namibian state power utility NamPower said that electricity tariffs will increase by 13% per year for the next five years until the Kudu gas-to-power project is in operation.
NamPower managing director Paulinus Shilamba said in a statement that the country’s peak demand recorded on 5 March, 2015 was 524MW (excluding Skorpion Zinc Mine) against a peak supply of 300MW recorded from local generation.
The shortfall between demand and supply continues to be supplemented by imports from various power utilities in the region as part of standing power purchase agreements.
Shilamba said the country’s power situation would remain critical until the commissioning of the base load station at Kudu in 2018.
Kudu gas-to-power project
At an estimated cost of $14.8 billion, NamPower together with the National Petroleum Corporation of Namibia and international partners are developing the 1.3 trillion cubic feet Kudu gas project off the Southern coast of Namibia, which includes an 800MW power station.
The N$14.8 billion project is expected to ensure energy security, with NamPower expected to take up 400MW for local consumption, while 100MW would be sold to South Africa and 300MW to Zambia.
Finance minister Calle Schlettwein announced late last month that government would support the project with a $407 million investment for the next three years, following several delays of the project.
Since the government’s financial guarantee, “upstream and downstream project teams are working hard to review the commercial agreements and conclude them in time for the Final Investment Decision by mid-2015 and Financial Close by December 2015,” Shilamba said.
NamPower has concluded Engineering Procurement Contract negotiations with China-based Shanghai Electric, a power generation and electrical equipment manufacturing company, as a preferred bidder and a Long-Term Service Level Agreement with Siemens as original equipment manufacturer.
“Standard Bank has been appointed as Mandated Lead Arranger and the contract in this regard will be signed soon. Transmission Connection Agreement with Eskom and Power Purchase Agreement negotiations with Eskom and CEC as regional off-takers are also at an advanced stage,” Shilamba added.
“Furthermore evaluation of tenders for the appointment of the SEP and Operations and Maintenance contractor are at an advanced stage and are expected to be concluded before the final investment decision,” Shilamba concluded.