Southern RED set for 2019

Local authority revenue protected

28 December 2018 | Energy

The establishment of the Southern Regional Electricity Distributor is expected to be completed in 2019 following the finalisation of a formula that will reimburse local authorities for loss of income stemming from the creation of this company.

The original plan was to establish the Southern RED before the end of this year, the Electricity Control Board said previously.

“The main reason for the delay has been the finalisation of the local authority surcharge which will compensate the local authorities for loss of revenue as a result of electricity supply being transferred to the Southern Regional Electricity Distributor,” said ECB chief executive Foibe Namene. The delay in its establishment was to ensure that local authorities would not be worse off.

“This aspect is key, as it will ensure that local authorities are not worse off after joining the RED. One notable achievement made has been the determination of the local authority surcharge. The local authority surcharge has been finalised and approved by the ECB,” Namene said. The establishment of the Southern RED came about as a result of an electricity distribution industry summit in 2014. The exit of the Southern Electrical Company (Selco) gave renewed impetus to the establishment of the regional distributor.

Last year, Namene said: “The Southern RED will come into effect this year or early 2018 and this is very important to the EDI reform since the process had been ongoing for a very long time.”

Highlighting the advantages of regional electricity distributors, Namene said REDs had been effective at refurbishing and replacing ageing infrastructure and managed to contain and reduce network losses.

“The REDs' contribution to the supply of electricity throughout Namibia has undoubtedly been a success,” said Namene.

“RED business operations are viable and shareholders receive dividends. For local authorities and regional councils it further means that they can be assured that their electricity functions are performed by a competent entity, with the capacity to provide good quality electricity services at required standards to their consumers.”

A RED for central Namibia is also expected to be established in due course.