REDs question NamPower partnership

20 August 2018 | Energy

Otis Finck

Regional electricity distributors (REDs) strongly believe that NamPower should focus on generation and transmission, and the REDs should focus on distribution.

Fessor Mbango, the CEO of Erongo RED, told mines and energy minister Tom Alweendo, and Electricity Control Board CEO Foibe Namene, that the REDs are of the strong opinion that NamPower cannot be both in the generation or transmission and distribution business by having shareholding in all three REDs.

Mbango further highlighted in his speech at the Electricity Supply Industry (ESI) Forum in Swakopmund last week that the normal and acceptable credit period is 30 days and said NamPower only gives a 14 day credit period, with payments expected to be made on the 15th of each month.

“If payment is not rendered by the 15th, then the outstanding amount incurs interest while the REDs only charge their debtors after 30 days.”

He also added that the issue of contestable customers was raised with all relevant stakeholders, but it has not been resolved yet.

With regard to bulk upgrade projects Mbango pointed out that efforts have been made to secure funding and make deposits to NamPower.

“We are however concerned about the pace at which these projects are executed and this really puts the REDs under financial constraints. Therefore we propose that bulk upgrades be done by the REDs as per NamPower’s specification and supervision. Upon completion, these assets can then be handed over to NamPower. This will expedite some of the major upgrade projects.”

Mbango suggested that the ministry can save a lot on costs paid to consultants by using the REDs to implement electrification projects in their respective areas.

“REDs had implemented a number of rural electrification in their respective areas and over the years acquired expertise on how to implement rural electrification projects. As part of our drive to bring electricity to each and every Namibian, we have connected many villages and settlement areas successfully within our respective areas of operations.”

He emphasised that the REDs are committed to diversify its energy mix by embracing renewable energy but called for a proper impact assessment study to be conducted to determine the impact on the network and on the REDs.

According to Mbango the REDs invested significantly in network upgrade and expansion to make sure that the network is robust to meet growing demand for electricity.

“When the REDs took over the electricity distribution, most of the infrastructure was in a dilapidated state, such that some of them were non-operational. For the last 15 years, there have been no reports of towns, villages or settlement areas within the REDs licensed areas being disconnected due to non-payment. This has been achieved due to robust revenue collection strategies, coupled with strong control mechanisms aimed at cost containment and optimal working capital management.”

Informal suburbs within municipal and local authority’s jurisdiction also benefited through the REDs. The number of areas with access to electricity has subsequently increased significantly and this in return contributed to the social economic development of communities.