SA power shortages threaten Namibia

ED RICHARDSON NAMIBIA’S MINES, trade and industry are under threat from South Africa’s own electricity shortages. The Namibian newspaper reports that Namibian Mines and Energy Minister Erkki Nghimtina has warned that an existing power supply contract with South African power utility Eskom will expire in July. “From August 2007 onwards Eskom can suspend power supplies to Namibia, should their internal electricity demands exceed supply,” Minister Nghimtina told parliament. He was answering questions from the Namibian opposition party after the New Era newspaper quoted a confidential Namibian Department of Public Enterprises report titled “Review of Security of Supply in South Africa”. It indicates the supply of power by Eskom should be regarded as “grave.” “In situations where South Africa’s demand/supply balance is tight, as it is likely to be for the next few years, it is relevant to question the extent to which Eskom should be obliged to meet export demand,” reads the report compiled in July 2006. It adds that Namibia, together with Zambia and Zimbabwe, have “non-firm” contracts with Eskom. This means that the power can be switched off at 24 hours notice, according to the newspaper. Namibia has been concerned about power supplies for some time. A study released in 2000 found that major investment requirements were needed in the short to medium term – in generation, transmission and distribution infrastructure and operations. According to Nghimtina, a task force would make recommendations to the Namibian cabinet “soon” on possible solutions. Namibia suffered a blackout as a result of the shut-down of Koeberg last year. Namibia imports about 50% of its electricity, coming mainly from Koeberg. Namibian business people interviewed by FTW over the past week were all concerned about the power situation, saying that it could affect the fragile economy of the country, which is heavily dependant on big power users such as the mines. New power stations are a number of years away, although plans are reasonable well advanced. Nghimtina said negotiations on the envisaged Kudu gas-fired power plant were entering the “final round”. The plant, due to come on stream in 2010, will produce power using gas from the giant Kudu field, the rights to which Tullow Oil acquired three years ago when it bought the assets of JSE-listed Energy Africa.
In a recent trading update, FTSE-listed Tullow appeared optimistic about achieving “significant” technical and commercial progress for the project this year.
There are concerns, however, about the high price of gas-fired electricity. “If not managed correctly, it [the resulting electricity tariff] will burden future generations to come, as these prices have to be passed on to the customers for the next 22 years,” Nghimtina said.