Erongo RED sheds light on tariff increases

Over the last year, N$23 million was spent on subsidising 19 000 customers in the region.

17 September 2018 | Energy

Fessor Mbango, Erongo RED CEO; “Erongo RED had good intentions when it started the subsidy in 2012 but some misused the scheme.”

Otis Finck

Erongo RED CEO Fessor Mbango rubbished claims that the regional power utility provider has increased electricity tariffs by 40%.

He also expressed regret for the inconvenience customers may have experienced as a result of the discontinuation of the subsidised electricity on 30 Amps connection.

Mbango said Erongo RED was closely following misinformation being circulated on social media about recent tariff increases and explained that the regional electricity distributor announced a weighted tariff increase of 4% as approved by the Electricity Control Board (ECB) in July.

“This 4% average increase is a weighted average of different tariff categories and therefore the impact on customers will vary according to the tariff category on which they are connected and their consumption pattern.”

He added that Erongo RED also communicated at the same event that customers who were previously on the subsidised tariffs (up to 30 Amp) will notice a reduction in units.

“This means that until June 2018 one would have received 61.8 units on subsidised tariffs for N$100. Effective 13 July 2018, the subsidy is no longer applicable in this category. Therefore customers who are currently on above 20 Amps will only get 42.6 units for N$100. The reason for such reduction in units is mainly due to the discontinuation of the subsidy on this category and not the tariff increase.

“All registered pensioners and those receiving disability grants are not affected by the limitation on subsidised tariffs and will continue to be subsidised up to 40 Amp connection.”

Mbango said Erongo RED spent approximately N$23 million on subsidising 19 000 customers which account for 48% of active customers between July 2017 and June 2018.

“This money could have been used for electrification projects but we resolved to pump it towards the community. We spent more than N$88 million on assisting pensioners and low income customers to have access to electricity through lower tariffs.”

He explained that the aim of the subsidised tariffs is to provide relief to pensioners and low income earners.

“Erongo RED had good intentions when it started the subsidy in 2012 but some misused the scheme. We noticed a steep increase in the number of customers on the subsidised tariffs over the past two years. This was due to an estimated 13 000 (well-off) customers who are not supposed to be on subsidised tariffs. Well-off persons draw a lot of electricity due to the appliances they use.

“We will continue to provide subsidised electricity on the 20 Amp connection and customers not able to afford electricity rates on 30 Amp are advised to move to 20 Amps.”

Mbango said that for every unit cost, up to 70% goes towards purchasing electricity from NamPower. Hence, Erongo RED has about 30% of revenue collected to finance its operations, maintenance, electrification, remunerations, subsidies, bulk upgrade projects and royalties to share holders.

He reiterated that Erongo RED was still committed to diversify its energy mix in order to ensure that electricity consumers reap benefits emanating from renewable energy.

“We announced a moratorium early this year on renewable energy to allow Erongo RED to conduct and impact assessment study on penetration of renewable energy.

“The aim of the exercise was to analyse the impact of renewable energy grid integration and ultimately determine the acceptable levels of renewable energy at various points of Erongo RED’s network. The study is almost done and a public announcement on the way forward will be made soon.”

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