Swakop calls for increased ErongoRED shareholding

21 November 2020 | Local News

Swakopmund • Erwin Leuschner

The municipality of Swakopmund is demanding more shareholding in the regional electricity supplier ErongoRED.

In light of this, town council instructed the electricity supplier's board of directors to take up the issue at their next meeting. In addition, the municipality also expects that royalties to council must be negotiated.

According to a draft resolution, councils’ claim is based on a shareholders' agreement that the municipality signed after ErongoRED was established in 2005. At the time, the entire existing electricity infrastructure was transferred to ErongoRED.

In return, it was agreed that town council would receive contracts from ErongoRED, which the regional electricity supplier would generate based on electricity sales.

Swakopmund’s stake in ErongoRED was set at 28.49%. The other shareholders are Walvis Bay (49.87%), NamPower (10.14%), Henties Bay (4.63%), Omaruru (1.84%), Arandis (1.66%), Karibib (1, 44%), Usakos (1.26%), Uis (0.35%) and the Erongo Regional Council (0.32%).

However, since 2005, the municipality has invested a total of N$92.3 million in the town’s electricity network and expanded on infrastructure. Private developers have also expanded the power grid, handing it over to ErongoRED.

Despite this investment, the municipality’s shareholding percentage has never been adjusted, although it should have been revised every five years. Although this was agreed in the shareholders' agreement at the time, it was not implemented.

“Swakopmund believes (given this investment) it should have an increased stake [in ErongoRED],” the Swakopmund Residents Association (SRA) said.

The resolution also states that royalties were introduced in August 2015. At that time there was a guarantee that “Swakopmund’s sales status would not be affected”. “However, council was underpaid on royalties,” it says.

Based on this, ErongoRED paid a monthly premium of N$1.156 million to town council between June 2005 and August 2015. In December 2015 and May 2020, the municipality received N$902 983 and N$1.123 million respectively, which was less than agreed.

Town council therefore demands that ErongoRED reimburse the amount of N$285 439 for these two months.