Nored sinks into the red
25 March 2021 | Energy
Northern regional energy distributor 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 yesterday, documents seen by Namibian Sun show.
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 is due to the national power utility, including interest.
Other payments due include N$12 million in salaries. Cash flow is so bad that the struggling parastatal contemplated defaulting on creditor payments to fulfil its remunerative obligations to 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, credit worthy checks and meters that were not recorded, information at hand shows.
“As board members, we are gravely concerned at the direction the company has taken. The shareholder is closely monitoring underperforming state-owned enterprises and Nored needs to get its act together to avoid the fate of Air Namibia and others,” a director told Namibian Sun.
The board is further concerned about N$34.8 million budgeted for the construction of Nored offices in Nkurenkuru and Katima Mullilo, saying this is a misplaced priority given the company’s current liquidity position.
Questions sent to Nored spokesperson Simon Lukas earlier this week went unanswered.
Despite its precarious situation, the company is expecting a cash flow of N$90 million from its pre- and post-paid customers. The report also noted that Nored expects N$101 million from the Receiver of Revenue in back-dated tax refunds for the period 2014 to 2017.
Meanwhile, the company’s last financial report was released in 2014 – other situation which irks the board. At the time, Nored held a cash position of N$106 million and reported a profit of N$49 million.
First of its kind
Nored was established in 2001 as the country's first regional electricity distributor (RED).
It distributes electricity to thousands of consumers in the Oshana, Ohangwena, Omusati, Oshikoto, Zambezi and two Kavango regions.
This is after Cabinet in 2000 approved the initiative to create REDs to distribute and supply electricity - through economies of scale - by pooling human and operational capital resources.
The ultimate goal is to stabilise electricity prices and ensure reasonable, affordable and cost-effective tariffs for electricity consumers.
Namibia was divided into five energy regions, to be serviced by five REDs. However, only three are currently operational - Nored, Cenored and Erongo RED.