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Kudu Gas damned

Government’s multi-billion dollar Kudu Gas investment in the absence of an energy law is on the receiving end of objections from the Consumer Advocacy for Electricity (CAE) group, as revealed this week at a meeting in Windhoek.The group has filed, amongst other formal objections against the project, a complaint with the Competition Commission citing Nampower’s hoarding of government electricity projects.This, according to former CEO of the Electricity Control Board (ECB), Siseho Simasiku, allows the national utility to act as the single producer and buyer of electricity neglecting Independent Power Producers (IPPs) to meet the country’s rising electricity demand. Currently, IPPs target a mix of green technologies such as invader bush to electricity power plants with a potential 100MW contribution, followed by solar with 90MW and wind energy with 75 MW. Detlof von Oertzen of VO Consulting, an energy consulting firm said at the stakeholder meeting facilitated by the Konrad Adenauer Stiftung that these projects should be coupled with the Arandis heavy fuel oil power plant with a contribution of 120MW and the proposed Walvis Bay power plant with a 250MW contribution, and the existing low-cost Ruacana Hydropower station.

Less then 500,000 MW is the national electricity demand which validates the import of expensive electricity due to peek demand exceeding the national capacity. Kudu Gas is said to have a lifespan of 15 years generating 750MW by 2018 from a resource of 3tcf (trillion cubic feet) of natural gas.
A Power Purchase Agreement (PPA) will see Nampower buying off 885MW for internal use, 300MW exported to Zambia and 100MW to South African utility Escom.The Independent Power Producers are of the opinion that the consumer should be made aware of the huge risk of particularly the Kudu Gas investment through the cost reflective tariff increase of 13,2% due to dependency on expensive electricity imports.According to von Oertzen, the electricity supply gap can be bridged by the private sector by lowering demand through improved efficiency as the cheapest way of ensuring energy costs are kept low. This he suggests can be achieved by prioritising energy usage switching from electrical to solar water heating.But Von Oertzen sees this only as an emergency measure and still believes that a significant energy gap will appear by the year 2020. “From 2016 until Kudu comes online will be crunch years. We need to be realistic on how to plug the gap long-time by getting all other electricity plants” he said. He attributed the rise in electricity demand to mining and mining-related projects, and the growth of the economy even though the demand from commercial industry is low which reflects low competitiveness. “The Electricity Control Board ought to be transformed into an energwzy regulator. This will give a chance to respond to the implementation of an energy law.”Former ECB CEO Simasiku believes this will allow for an energy law to govern government investment in the renewable energy sector. “Either we do this or Namibia goes into darkness” Simasiku said. Access to electricity is a key development concern as Namibian demands equals only 0.25KW per person. Only when an economy requires at least 1KW per person, is it regarded as developed. Less than 45,000 people or 16 % of the rural populations has access to electricity leaving roughly 230,000 without. Some 150,000 people or 69% of the urban population enjoy the benefit of electricity.The government through Namcor is adamant that the withdrawal of Tullow as investors from Kudu Gas will not harm delivery of the project with Tullow committing itself to the project until the Final Investment Decision slated for June 2015. The government holds 44% shareholding while 46% is owned by Tullow Oil and a Japanese partner.

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