Namibia is expected to finalise a tax regime for its burgeoning green hydrogen sector by the end of the year, according to Green Hydrogen Commissioner James Mnyupe.
The tax regime will play a crucial role in determining the amount that players in the sector will pay, as President Hage Geingob has indicated that the implementation agreement for the planned N$170-billion Hyphen Hydrogen Energy project is set to begin in the first quarter of this year.
Mnyupe told The Brief that the country has completed a benchmarking exercise that will assist policymakers in deciding on a new hydrogen tax system. “We have discussed various ideas with developers and have investigated various scenarios around the world. We will likely finalise these issues during this year,” he said.
The Green Hydrogen Commissioner also mentioned that regulations guiding taxation around green hydrogen will be included in the proposed Synthetic Fuels Act, which will govern all things related to green hydrogen and other synthetic fuels once it is finalized.
“We will likely capture this in the envisioned Synthetic Fuels Act. But first we have to finalize the policy, then table the Bill in Parliament and follow the necessary legislative process and consult the various key stakeholders,” Mnyupe said.
For context, Namibia has imposed a corporate tax rate of 37.5% on non-diamond mining operations, a 55% tax rate on diamond mining operations, a 10% royalty on rough diamonds and a 5% royalty on oil and gas. The government has also imposed a 35% corporate tax rate on oil and gas operations.
Namibia has already launched a Synthetic Fuels Strategy, which will establish a suitable and fit-for-purpose structure to develop the green hydrogen industry and the envisaged structure will be responsible for planning, procuring, and monitoring future green hydrogen projects developed on state-owned land.
Hyphen Hydrogen Energy, a joint venture between Nicholas Holdings of the UK and ENERTRAG of Germany, was selected as the preferred bidder for the country’s first green hydrogen project in November 2021.
The proposed plant will produce 350,000 tonnes of green hydrogen per annum for regional and global markets by the end of the decade, using 5-6 Gigawatts of renewable generation capacity and 3GW of electrolyser capacity, cutting 5-6 million tonnes per annum of carbon dioxide emissions.
According to Hyphen’s plans, the first phase of 125,000 tonnes of green hydrogen production is planned to come online at the end of 2026.
