Cabinet approves transformative US$10 billion hydrogen project
The Cabinet recently approved the entry into an agreement with Hyphen Hydrogen Energy (Hyphen) to govern the development, implementation, and operation of sub-Saharan Africa’s largest, and only fully vertically integrated, green hydrogen project.
According to a statement released this week, the transformative impact of this project on Namibia and its economy is considerable.
The total project capital investment of US$10 billion is roughly equivalent to the country’s annual GDP and at full-scale development, anticipated before the end of the decade, the project will produce 2 million tonnes of green ammonia annually for regional and global markets.
The pioneering Feasibility and Implementation Agreement (FIA) planned to be signed on 26 May governs the process under which Namibia’s first green hydrogen project will be realised, as a first step in the implementation of the government’s broader green hydrogen strategy. With limited existing international precedent to draw upon, GRN and the inter-ministerial Green Hydrogen Council assembled a negotiations team which was supported by international advisors, to develop the FIA. GRN and Hyphen believe that the FIA will set a new global benchmark, creating a template for the sustainable and equitable development of other green hydrogen projects.
The President, HE Dr. Hage Geingob said: “The Harambee Prosperity Plan II noted that the Namibian Government would investigate the feasibility of incubating a synthetic fuels industry in Namibia, as a key transforming agent of our economy. On Friday the 26th of May 2023, we earnestly embark on that journey, as we kick start a process that has the potential to transform the lives of many in our country, the region, and indeed the world.”
President of the European Commission said Ursula Von Der Leyen said Namibia has the potential to become one of the main renewable energy hubs on the African continent and even worldwide.
“The agreement is a major step for the production of green hydrogen in the country. I am proud that Global Gateway allows the EU and Namibia to invest in a shared future fighting climate change together, making Namibia energy-independent and creating jobs and prosperity,” she added.
Meanwhile, Obeth Mbui Kandjoze Chairman of the Namibian Green Hydrogen Council and Director General of the National Planning Commission said: “We are honoured by the trust and confidence exhibited by Hyphen and the global community, for choosing to build such a catalytic project in Namibia. This project is strategic in its potential to create employment in Namibia, reduce regional energy insecurity and help combat climate change by decarbonizing hard-to-abate sectors globally. The Government of the Republic of Namibia is resolute in its unwavering commitment to realise the potential of this transformative strategic bet!”
Marco Raffinetti, CEO of Hyphen Hydrogen Energy, said: “We are delighted to have concluded the FIA and look forward to delivering on the next phase of development of this ground-breaking project.
On behalf of Hyphen, I would like to thank the Government for its unwavering support and relentless commitment to unlocking Namibia’s green hydrogen potential. We are confident in our ability to work hand in hand with the people of Namibian to drive lasting change through economic development and job creation, whilst paving the way for a greener and brighter future.”
Dr. Gunar Hering, CEO of ENERTRAG, said: “ENERTRAG is proud and honoured to be a partner of the Namibian government in creating a competitive green-hydrogen industry. Our aim and commitment are to grow Hyphen into a world-class Namibian green-hydrogen company.”
Under the FIA Hyphen is responsible for the technical, financial, environmental, social, and commercial delivery of the project. GRN is responsible for providing the land on which the project will be established and developing and implementing the required legal, fiscal, and regulatory environment necessary for the establishment and sustainable operation of Namibia’s green hydrogen industry.
At the heart of the FIA is the commitment to the socio-economic development of Namibia, through job creation and local procurement. It is estimated that the project will create up to 15,000 new jobs during the construction phase, and 3,000 permanent jobs during its operation, with the target for 90% of these jobs to be filled by Namibians and 20% by youths. The project is further targeting 30% local procurement of goods, services, and materials during the construction and operational phases.
The project will generate significant income for the Namibian fiscus through the payment of land rentals, royalties on all project revenues, and taxes. GRN also has an opportunity to be a co-investor in the project with the right to take up to a 24% equity interest at cost. Thanks to its partnership with the European Union and the Global Gateway Initiative, Namibia has mobilised donor and concessional funding from Invest International and the European Investment Bank of more than EUR540 million/ NAD 11.167 billion to finance the development of the green hydrogen industry and to fund its equity participation in the project, with additional support expected to be announced post the execution of the FIA.
The government meanwhile, has mobilised more than €40 million to date to de-risk its equity investment in the project, associated infrastructure, and future green hydrogen projects, additional support is expected to be announced post the execution of the FIA.
Namibia is also working closely with its development partners to establish a dedicated program that will provide the requisite resources to coordinate the implementation of the Hyphen Hydrogen Energy Project and Namibia’s broader green hydrogen strategy. This program illustrates the multinational nature of this industry and the important role Namibia will play in decarbonizing global hard-to-abate sectors while industrializing its economy.
The approval of the FIA marks the commencement of Namibia’s transformative journey towards a thriving and sustainable future, putting Namibia on the map as a global hub for clean energy innovation and will empower the country to build a greener, more resilient future for generations to come.