Power fears grow

The cancellation of the Xaris project tender has sparked fears that Namibia may not be able to meet its electricity demand once a deal with South Africa's Eskom runs out.

23 March 2018 | Energy

Arandis Power managing director Ezio Vernetti has urged NamPower to re-engage with his company as the “reserve bidder”, following the unceremonious canning of the N$5 billion Xaris project, which would have delivered a 250 megawatt stop-gap power solution for the country.

Vernetti said there was a very real risk that Namibia would not be able to meet its electricity supply needs, once NamPower/Eskom agreement runs out in two years' time.

NamPower currently imports 60% of the country's electricity supply annually and spends at least N$2.6 billion to foot the bill.

An African Development Bank assessment revealed that power demand in Namibia is projected to grow at close to 9.5% per year between 2015 and 2020.

Recently appointed energy minister Tom Alweendo confirmed earlier this month that the NamPower board had informed him of its termination of the multibillion-dollar Xaris tender for the construction of a power station at Walvis Bay.

The tender had been extensively reported on, given Vice-President Nangolo Mbumba's ties to the company.

The Xaris proposal attracted negative criticism, including that of favouritism and concerns that the electricity generated would be costly for customers.

Vernetti said he hoped that in the aftermath of the Xaris saga, NamPower would now stand by its word, and talk to them.

“We are hoping that NamPower will refer back to us. We do not want a blank cheque, we would merely like to propose a solution. They undertook to refer back to us.

“That would be the right thing to do for them to re-engage with us. We should not be denied the opportunity to talk… stand by your word and let us talk,” Vernetti said.

When asked what the cancellation of the tender would mean for NamPower, Vernetti said there was a risk Namibia would not be able to meet its energy needs should the NamPower/Eskom contract runs out in two years' time.

According to him, it would be beneficial if NamPower would consider building a long-term base load power project to secure Namibia's energy self-sufficiency.

“What NamPower needs is a long-term project… not a stop-gap project,” said Vernetti.

Arandis Power is hoping NamPower will kick-start a process where it will invite bids following the cancellation of the Xaris power project.

Arandis Power was one of the companies vying for the lucrative tender and lost out to Xaris Energy, which was selected to construct what was deemed at the time as a stop-gap project by NamPower.

Speaking to Namibian Sun this week, Vernetti said he was hopeful NamPower would commit to its written undertaking for the construction of the 120 megawatt (MW) project.

“We do trust that NamPower will stand by its written undertaking to re-engage with us in a power purchasing agreement negotiation for our original 120MW proposal that was put 'temporarily' on hold pending the conclusion of the controversial 250MW tender,” said Vernetti.

His firm said it would also not compel NamPower to re-advertise the project.





“Arandis Power has no intention to compel NamPower to re-advertise the tender for the 120/250MW power project,” Vernetti said.

A court process had established that Xaris Energy had offered a power plant outside the required tender specifications, according to Vernetti.

NamPower said it will not re-advertise the tender.

“Please be informed that the request for proposal (RFP) for the joint development of a 230-250MW power project, (for) which (the) RFP was issued in 2014, was cancelled on 1 February 2018. NamPower is however not at liberty to provide reasons for the cancellation,” said the power utility's managing director, Simson Haulofu.

A damning 2016 report compiled by New Energy Consulting and Thunder Energy Solutions, which were tasked by the mines ministry and the Electricity Control Board, poked holes in the Xaris project.

It even questioned the manner in which NamPower came to the conclusion that Xaris Energy was the preferred bidder.

The report also questioned Xaris' technical and financial bid, and said the bid had failed to comply with the tender requirements, when compared to the submission of Arandis Power.

The aim of the study was to look at whether the Xaris project could be a fast-track solution that could be implemented by July this year to address the country's short-term electricity supply problems, and also to serve as a medium to long-term back-up to Kudu.

The study was supposed to determine whether Xaris would be able to meet the tender objectives within the stated period, and whether Xaris is the best alternative in terms of costs, risks, security of supply and ultimately end-user tariff impact.

Interestingly, Arandis Power was not included in the report analysis. Arandis Power was awarded the 'reserve bidder' status for the 250MW tender.

“Xaris is a relatively expensive option,” read the report, which pointed out that the various alternatives were evaluated deliver power at significantly lower cost and risk than the Xaris project.

The report concluded the Xaris project would cost N$7.6 billion by completion.

OGONE TLHAGE

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