THE Electricity Control Board (ECB) hardly shocked consumers yesterday when it stuck to the increase trend of the past three years by announcing a tariff hike of 18,28 per cent in bulk electricity for 2011.
Last year the body approved an increase of 18 per cent, while in 2009 and 2008 it sanctioned increases of 15 and 18 per cent respectively.
ECB chief executive officer, Siseho Simasiku, said to meet the objectives of the White Paper on Energy Policy, tariffs will have to continue to increase until at least 2019-2020.
However, he assured consumers that the ECB will consult with Government and do a study on the issue of affordability.
He said 13,93 per cent of the approved 18,28 per cent is to allow NamPower to recover its electricity costs. The remaining 4,35 per cent increase will cover other needs in the electricity supply industry, he said.
“It is important that the ECB, as regulator, takes a long-term view and not only focus on the current year to ensure that the economy, the end-consumer and NamPower, as well as private investors are protected over the next number of years which are critical if Namibia is to ensure sufficient electricity supply,” Simasiku said.
The country faces serious power challenges, he said. NamPower still imports between 50 and 70 per cent of the national electricity demand. Namibia should already last year have generated more than 75 per cent of its energy and supply 100 per cent of peak power from its own generation, according to 1998’s White Paper on Energy Policy.
Furthermore, NamPower’s current contract with the Zimbabwe Electricity Supply Authority (Zesa) expires in 2014, leaving Namibia short of 150 megawatts.
Simasiku said that if NamPower can’t find another supplier in the short run, Namibia will have to buy electricity on the regional “emergency market at emergency prices”.
“This will create a price shock to the Namibian economy if not planned for properly,” he said.
Simasiku said increasing tariffs by 18,28 per cent will ensure that NamPower “remains on the long-run marginal cost path” so that it can build up enough reserves and protect consumers agains price shocks.
He said importing power from neighbouring countries is not endlessly sustainable and that Namibia will have to invest in various capital projects.
Simasiku indicated that the new increases will become effective in mid-August.
Regional electricity distributors (REDs) and electricity suppliers like the City of Windhoek will then have to individually get permission from the ECB to increase the tariffs they will charge consumers.