Staff Reporter
THE Electricity Control Board of Namibia (ECB) has announced that the government, through the Ministry of Mines and Energy, will provide N$365 million to NamPower and other distribution utilities as a subsidy to cushion consumers against high electricity tariffs.
“Following the plight of the nation, which you are well aware of, specifically regarding the affordability of electricity, the Minister of Mines and Energy, Tom Alweendo, engaged ECB to look into the plight of consumers, and that is why we have called this media briefing. In this regard, the government resolved to avail N$365 million to subsidize electricity consumers for the 2024-2025 financial year,” ECB CEO Robert Kahimise said.
He added that this subsidy will cover the period from 1 July 2024 to 30 June 2025.
“This means that the consumers will pay the same tariffs as per the schedule of approved tariffs for the 2023-2024 financial year. This is within our mandate and will allow licensees to deviate from the approved 2024-2025 schedule of approved tariffs,” Kahimise said.
Approximately N$221 million of the N$365 million has been set aside to allow NamPower to execute its mandate and ensure an uninterrupted supply.
The CEO added that the remaining amount of N$144 million will be provided to distribution utilities, which will use this money to lessen the impact of electricity costs during the said period.
Kahimise explained that Namibia has bilateral relations with Zambia, Zimbabwe, and South Africa, the costs of which are met through the NamPower bulk tariff. He added that about 70% of the bulk tariff is derived from generation and transmission costs and that Namibia’s electricity imports are also included in that tariff.
“This has allowed NamPower to ensure the security of supply and avoid load shedding, which is happening in South Africa. We have yet to experience this. How have we managed through NamPower? It’s by allowing cost-effective tariffs,” Kahimise said.
He added that given the high cost of imports, consumers bear the full cost of electricity supply to them. “That’s why we are here. The drive towards cost-reflective tariffs remains a priority in Namibia as well as in the SADC region,” Kahimise said.
He mentioned that most tariffs in the SADC region remain below cost-reflective tariffs, which has led to load shedding in other countries, and that only Namibia, Mauritius, and Tanzania have achieved cost-reflective tariffs.
Kahimise, however, added that the ECB has implemented several measures to mitigate the high cost of electricity.
“For every unit you buy, ECB has been putting away a few cents. It has grown to as much as N$600 million. We have used it almost to depletion to mitigate the impact of tariff increases. Long-run marginal cost reduced increases by 1 or 2% last year. This also subsidizes the cost of constructing power plants such as Omburu Power Plant. We have also used the same fund to cushion price increases,” Kahimise said.
He warned that there is a substantial shortage of electricity in southern Africa and that this will continue until new power plants are built. “This will continue to increase power prices. The drought situation in Zambia and Zimbabwe will impact the security of supply, and Namibia will have to make alternative plans to ensure the security of supply,” Kahimise said.
