Councillors slam Nored’s dividend payments
Councillors say Nored rakes in millions from the Kavango East Region, yet there are no significant returns for its shareholders - the local and regional authorities.
20 August 2021 | Energy
Local and regional authority leaders in Kavango East are demanding more from Nored, saying that the dividends and surcharges they get are a mere drop in the ocean compared to the millions the electricity distributor collects from their communities.
These sentiments were expressed at an induction training workshop held at Rundu on Wednesday.
The 18 local authority and eight regional councils in which Nored operates own a collective 66% stake in Nored.
The chairperson of the Kavango East Regional Council, Damian Maghambayi, said the surcharges they get from Nored are insufficient and that the formula to calculate them should be reviewed.
“The dividends or the surcharges the regional council is receiving from Nored are not sufficient, hence we call for drastic review on the methodologies implored to determine on how much the regional council can take.
“Remember, we are using the same surcharges to electrify villages in the region and at the end the money goes back to Nored.”
Rundu Rural Constituency councillor Paulus Mbangu argued that Nored rakes in millions from operating in the Kavango East Region, yet there are no significant returns for the local and regional authorities.
Mbangu also took aim at the leadership structure of Nored. He said Kavango East has no representative on the board.
Other issues highlighted at the workshop were the challenges faced by communities during the rainy season, a lack of streetlights, a lack of information on how Nored operates, as well as ever-increasing electricity tariffs.
Nored CEO Fillemon Nakashole explained that dividends and surcharges are calculated using formulae that take into account the electricity infrastructure and sales of electricity to a particular community.
Nakashole also said that dividends can only be paid when a profit is made.
Earlier this year, Namibian Sun reported that Nored - which has not produced audited financial reports for over six years – is struggling financially.
The company had difficulties paying about N$67 million due to NamPower, documents seen by Namibian Sun revealed.
It was also reported that according to a concerned board member, Nored pinned its hopes on a N$90 million cash inflow to help fend off its creditors, but outflow projections for the period amounted to N$112 million.
Of this, N$87 million was due to the national power utility, including interest.
Other payments due included N$12 million in salaries. Cash flow was so bad that the struggling parastatal contemplated defaulting on creditor payments to pay its staff.
Nored’s financial woes were impacted by sitting and travel allowances to the tune of N$1.6 million, slow collection of funds from customers, creditworthy checks and meters that were not recorded, information at hand showed.
The board was further concerned about N$34.8 million budgeted for the construction of Nored offices at Nkurenkuru and Katima Mulilo, saying that was a misplaced priority given the company’s liquidity position.