Rikus Grobler | Oct 18, 2017 | 0
Xaris project viable – Steyn
Construction of the Walvis Bay Power Plant is expected to commence as soon as NamPower has signed a Power Purchase Agreement with Xaris, its Managing Director Hennie Steyn said in an emailed response to the Economist this week.
The Walvis Bay Power Project was shrouded in uncertainty following months of indecisiveness by the Ministry of Mines and Energy, and state-owned enterprise, NamPower.
Responding to questions posed by the Economist, Steyn said, “The next steps for the Project will include finalising the terms and conditions for the Power Purchase Agreement (PPA) for approval by the relevant authorities, consolidating the regulatory approvals and completing the transactions necessary to bring about a speedy financial close.”
The power plant will be located near Walvis Bay, 12.5 kilometres from the town. The power plant site has been approved by the Walvis Bay Municipality and is located inside the earmarked heavy noxious industrial area. The site is ideal for the power plant with close proximity to the port for import of fuel and transmission infrastructure to evacuate the power, explained Steyn.
He added, “Concept and Environmental studies have been completed while a detailed design is underway. Xaris has also released a project update that will be shared by 15 January 2016. The project prides itself as being transparent with all necessary reports availed on the website”
Continued Steyn, “Much of the groundwork has been done including the necessary environmental impact assessments and putting in place of supplier and partner agreements. Due diligence on the project has more or less been concluded. Construction will commence as soon as the Power Purchase Agreement has been agreed between Xaris and NamPower.”
Steyn optimistically expects the plant to provide initial power generation as quickly as 6 months from financial close.
“The overall construction schedule will be between 12 and 15 months to reach full power delivery.”
Responding to claims of high energy costs Steyn explained, “the capital cost is completely misrepresented as the actual costs are reflected through the evacuation cost of electricity making the project viable.
“Obviously overstating the capital cost will impact negatively on the evacuation cost of electricity.
Added Steyn, “it must be understood that the cost and pricing remains confidential until the NamPower RFP process has been completed.
“Taking this into account, the nearest competitor evacuation cost of electricity was almost double the Xaris price.”
Steyn is of the opinion that Namibia could be paying an estimated N$6.8 billion over 3 years, from January 2016 to December 2018 for electricity imports, negatively impacting on the Namibian economy. “Another important aspect to consider is the cost of unserved energy estimated at N$20/kWh if there is no electricity.”
“Meticulous financial modeling by European-based reSA considered input costs over the project’s full life cycle and provided a solid case for a highly competitive electricity tariff. The tariff for base load operation is based on conservative assumptions and represents the lowest cost option of electricity for Namibia both in terms of generation possibilities as well as available electricity imports.
“So the Walvis Bay Power Plant project offers an excellent deal to Namibia,” Steyn concluded.