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NamPower: Augmenting capacity to meet Namibia's power demands [free access]

September 1, 2013

With rising power demand and increasing dependence on electricity imports, Namibia is striving to augment its power generation and transmission infrastructure to cater to future requirements. An already rising power shortage in the country is increasing the costs for all consumers. Namibia’s power sector was restructured in 2000 during which the regulator, Electricity Control Board (ECB), was set up. The Ministry of Mines and Energy is responsible for policy formulation.

 

Presently, the government-owned NamPower controls the country’s transmission network. It also dominates the power generation segment. NamPower had not added any generation capacity for several years till 2011. However, in 2012, the company added 115 MW, increasing the country’s installed capacity to 1,108 MW. Hydroelectric plants account for over 67 per cent of installed capacity. The power distribution segment, on the other hand, has five regional electricity distributors that procure power from NamPower.

 

Transmission Infrastructure

As of end-June 2012, Namibia had a total transmission line length of 11,092 km at voltage levels ranging from 66 kV to 400 kV. Between 2008 and 2012, line length registered a compound annual growth rate of 5.42 per cent. The growing size of the network is also leading to greater pressure on the operation and maintenance of existing assets. Reportedly, network outages due to maintenance are on the rise, and this is being reflected in key performance parameters such as scheduled system minute losses.

 

About one-third of the total transmission line length is at the 66 kV level, followed by 220 kV lines accounting for a 26 per cent share. High voltage transmission systems are instrumental in the country’s cross border links, which play an important role in the power system. In 2012, the Caprivi Interconnector, a 950 km long, ±350 kV high voltage direct current (HVDC) link between Namibia and Zambia, was energised. Between January and August 2012, the Caprivi link’s cumulative availability was reported at 99.7 per cent against an expected 98 per cent.

 

Table 1: Transmission line length (km)

Voltage (kV)

2010

2011

2012

400

           988

           988

           988

350

             -  

             -  

           953

330

           522

           522

           522

220

        2,800

        2,800

        2,911

132

        2,092

        2,092

        2,113

66

        3,605

        3,605

        3,605

Total

       10,007

       10,007

       11,092

Note: The figures are as of end of June in the mentioned year.

Source: NamPower

 

The Namibian grid is connected to the Southern African Power Pool (SAPP) through four high voltage interconnections. Two of these (400 kV and 220 kV) are with South Africa, one is a 220 kV link with Zambia and another is a recently commissioned 132 kV link connecting Namibia with Angola. Power supplied by the SAPP members—South Africa, Zambia, Zimbabwe and Mozambique—helps Namibia meet its power demand. Imports account for about 60 per cent of the total power injected in Namibia’s power network. Among the SAPP members, South Africa accounts for a 65 per cent share, followed by Zimbabwe (20 per cent) and Zambia (15 per cent).

 

Table 2: Power supplied into Namibia’s power system (GWh)

Company

2008

2009

2010

2011

2012

NamPower

        1,572

        1,490

        1,305

        1,430

        1,643

ZESCO

             27

             29

             47

           319

           378

Eskom

        1,961

        1,501

        1,429

        1,522

        1,645

ZESA

             85

           648

           891

           637

           496

EDM

             52

             24

             95

               2

             -  

STEM

             22

             -  

             -  

             -  

             -  

Total

        3,719

        3,692

        3,767

        3,910

        4,162

Note: ZESCO: Zambia Electricity Supply Corporation; ZESA: Zimbabwe Electricity Supply Authority Holdings; EDM: Electricidade de Moçambique; STEM: Short Term Energy Market

Source: NamPower

 

NamPower’s bulk power tariffs include the cost of generating, importing and transmission. This tariff is charged from large consumers that source power directly from NamPower as well as from regional electricity distributors. Tariff determination methodology is stipulated by the ECB, which deliberates on the utility’s proposals to revise tariffs once in a financial year. The trend shows that bulk power tariffs in Namibia have more than doubled between 2004 and 2012. Rising demand for power and the significant reliance on imports are factors contributing to the increase in bulk power tariffs.

 

In May 2013, the ECB announced a 13 per cent increase in NamPower’s bulk power tariffs. The regulator attributed the increase to the ongoing power shortages in the country. Further hikes in tariffs may be required in the coming years, till the shortage is moderated through upcoming power generation capacities. NamPower also requires higher tariffs to fund its various projects under development, both in the transmission and generation segments.

 

Notably, government subsidies play an important role in minimising the burden of rising power tariffs. ECB has estimated that government assistance worth about NAD60 million could be required to cushion the impact of the latest round of bulk power tariff hikes. The National Electricity Fund administered by the Ministry of Mines and Energy has made available NAD20 million to mitigate energy prices in the country. Earlier, the government had provided NAD1 billion to subsidise the development cost of the Caprivi Interconnector project.

 

NamPower’s latest financial results for the year ended June 2012 show a 10.7 per cent increase in total revenue to NAD2.3 billion. Delays in announcing tariff hikes have had a negative impact on the company’s earnings.

 

Projects and Investments

NamPower’s capital expenditure during the financial year 2012 stood at NAD346 million. The expenditure has been incurred in areas including power generation projects, rural electrification, substation development, refurbishment and upgrading, and deployment of new transmission systems. NamPower’s investments in power transmission are aimed at not only maintaining existing system performance but also to provide connectivity for upcoming power generation projects. Also, the company is increasingly seeking renewable energy avenues to diversify its power generation sources.

 

Some of the key ongoing projects in power transmission are the Rössing–Walmund, Auas–Naruchas, and Omatando–Efundja transmission lines. The Rössing–Walmund project is aimed at replacing the existing 220 kV line with a twin circuit one to accommodate the load growth in the West Coast region. The line will be equipped with an optical ground wire (OPGW) conductor. Under the Auas–Naruchas project, a new 80 km long, 132 kV transmission line will be constructed to strengthen the power supply infrastructure in the central-southern area around Rehoboth. Another 132 kV project is the Omatando–Efundja line, which will upgrade an existing 66 kV substation to cater to the request for additional capacity in the Ondjiva town north of Oshikango.

 

Among the high voltage transmission projects is the 400 kV Gerus–Otjikoto transmission line. This is a 177 km long, 400 kV three-phase transmission line, which will connect the Gerus transmission station near Otjiwarongo to the Otjikoto transmission station near Tsumeb. The proposed line is to be fitted with aluminium conductor steel-reinforced (ACSR) conductors and 24-pair OPGW. The project, whose tender was launched by the company in October 2012, is scheduled for commissioning by 2015-16.

 

NamPower has also been undertaking projects to strengthen the west coast transmission network to facilitate power evacuation from upcoming power generation capacities in the Erongo region. Upcoming projects in the region include the Erongo coal power station (ECPS), the Arandis power station and the Husab mine, all of which necessitated augmentation of the transmission infrastructure. The project will consist of three separate transmission lines in the Arandis area—a 42 km long, 400 kV, single-circuit line from the ECPS to the existing Khan substation; a 4 km long, 220 kV, double-circuit line from ECPS to the existing Rössing–Khan transmission line; and a 25 km long, 220 kV, double-circuit line from ECPS to the Walmund–Rössing line.

 

There are other works underway for network extensions at the 66 kV level to connect new villages in regions of Finke, Sungate, Namib Poultry and Sendelingsdrift (Namdeb), as well as to provide connectivity for the Von Bach pumping scheme. The company is also planning extensions at the 132 kV level for Omuthiya, Namibia Custom Smelters, desalination at Mile 6 and Walvis Bay. NamPower is also in the process of retrofitting existing transmission lines with either OPGW or metallic aerial self supported (MASS) conductors on a capital cost sharing basis. Key projects completed in this regard include the transmission line sections of Walmund–Swakopmund, Gerus–Omburu, Regen Station 1–Kombat (Asis) and Auas–Van Eck. With various such projects, NamPower aims to cover most of its transmission lines through a fibre optic network.

 

ZIZABONA Project

The ZIZABONA project seeks to connect the power transmission networks of Zimbabwe, Zambia, Botswana and Namibia. For Namibia in particular, this project will enable import of power from Zambia, which is developing significant hydroelectric power generation projects. It will also help ease the congestion on the existing transmission corridor to South Africa, besides facilitating power trading. The transmission infrastructure for the project will be developed, built and owned by the respective utilities of the countries. Besides NamPower, utilities involved in this are Zimbabwe’s ZESA, Zambia’s ZESCO Limited and Botswana’s BPC.

 

The project entails the construction of about 408 km of lines. The Hwange (Zimbabwe)–Livingstone (Victoria Falls in Zambia) line will be about 101 km long. The Livingstone (Zambia)–Zambezi (Namibia) line will be 231 km long and the Victoria Falls (Zimbabwe)–Pandamatenga (Botswana) line will be 76 km long.

 

The project also includes the following components:

 

The ZIZABONA project will be implemented through a special purpose vehicle (SPV). The new company will be registered in Namibia. The four utilities will own equal equity stakes in the company. The remaining equity holding is likely to be offered to Eskom of South Africa and Copperbelt Energy Corporation (CEC) of Zambia.

 

The project is estimated to cost USD223 million and will be financed on a debt-equity ratio of 70:30. It is being partly funded by grants and loans from international funding agencies. In May 2012, the World Bank and European Investment Bank (EIB) approved loans aggregating USD90 million to ZESCO Limited for improving the reliability of the power system along the Kafue Town–Muzuma–Victoria Falls corridor, which is related to the ZIZABONA project.

 

The World Bank will extend USD56.5 million, EIB will provide USD30 million and the remaining will be provided by ZESCO. In July 2012, the African Development Bank (AfDB), the Development Bank of Southern Africa (DBSA), EIB, L’Agence Française de Développement (AFD) and Stanbic Bank Botswana agreed to extend more than USD160 million towards the project. DBSA will provide USD50 million while AFD will provide between USD30 million and USD50 million. AfDB will fund 40 per cent of the debt portion of the project while the remaining funds will be procured from finance partners in Africa.

 

The financing and contracting of the ZIZABONA project is expected to be completed in 2013. The tenders for equipment, procurement and construction contracts will be launched around mid-2013. The project is scheduled for completion by January 2016.