The government will be acquiring a 24% stake on offer in the Hyphen Green Hydrogen project through a newly established sovereign wealth fund, an official has revealed.
The Green Hydrogen Commissioner and Presidential Economic Advisor, James Mnyupe, said the country seeks to acquire the stake through a newly established sovereign wealth fund dubbed SDG Namibia One where a seed capital of €40 million in grants will be invested.
“SDG Namibia One has been strategically established to be where funding will be kept, and it is through this fund that the government will be able to buy the 24% equity it negotiated with Hyphen Green Hydrogen. Two fund managers have been nominated and consist of the Environmental Investment Fund and another renowned fund manager in the Hague,” Mnyupe said.
An office to serve as an overseer of the project is being set up, and thus far, the European Union has provided funding of €1.2 million and the Netherlands has contributed €3 million.
“The fund manager will oversee the running of that institution and it will not only invest in Hyphen, but in other projects and infrastructures in the country,” he said.
“The fund is looking at sourcing capital from different funders depending on the risks. Those who want to help develop the early stage concept, such funds will go into a development fund of SDG Namibia One.
“Once it starts maturing to the construction phase of the project, then you can start attracting big funders from the region and including internationally. Then once the project is up and running, local investment to this vehicle may be required from entities such as the Government Institutions Pension Fund, and will start investing in this particular vehicle,” he added.
Other notable local investors include the Development Bank of Namibia, Bank Windhoek, and NamPower, while internationally, KfW, SwedFund, USAID, and CDPQ also feature on the list of possible investors.
Namibia is embarking on a multibillion-dollar green hydrogen project in the south where Hyphen Hydrogen Energy, a company appointed to implement, is undertaking a N$200-billion feasibility study to test the viability of the idea.
Mnyupe made these remarks at the State House during a joint working visit of the Prime Ministers of Denmark Mette Frederiksen and the Netherlands’ Mark Rutte, who are in the country to sign bilateral agreements relating to green hydrogen and socio-economic development.
“This is one of the key fruits of the partnership that started off in Brussels and concluded in Egypt with the Netherlands by President Hage Geingob and Prime Minister Rutte. The strategic objective of the partnership is to serve as a vehicle to mobilise local and international regional capital, and the Dutch were strategic in helping us put it together,” he said.
Mnyupe said support was needed because the project is just too huge for Namibia, and thus project management is vital in this regard due to the complexity of the programme.
He added that establishing a project of that nature requires strategic infrastructure, hence the need for support.
“Namibia aspires to export excess electricity to the southern regional pool, and Denmark and Netherlands are working with South Africa to export excess power to Germany and other countries, which I believe is another area of collaboration,” he said.
Furthermore, he said the realisation of green hydrogen is vital to stimulate the economy through the export of excess electricity and the resumption of industrial activities such as the Rosh Pinah zinc smelting.
“In Rosh Pinah for instance we smelt zinc, which is one of the finest in the world, but that had to stop because it consumes too much electricity as was relying on Eskom. Of course, South Africa could not afford to continue anymore, and that was worth N$11 billion in revenue collection, and in times like this of Green Hydrogen it is essential to produce and resume the pivotal economic activity,” he said.
Namibia and Netherlands collaboration comes from 2022 when talks began with Geingob and Rutte, and have been finalised.
Denmark is involved in the implementation of Green Hydrogen and it is expected to produce green energy by 2028, while the Netherlands will be involved in processing green molecules from around the world to transform into energy, with Germany being the target market.
Meanwhile, Namibia is hopeful that after two years of feasibility study if the results are good, by 2026 might start producing first molecules and in 2028 the first million tonnes of ammonia.
Mnyupe also revealed that the port of Lüderitz will be upgraded with an approximate funding of €500 million.
A desalination plant will also be constructed with a capacity of producing 18,000 million cubic litres of water, of which 2 million cubic metres will be given to the town of Lüderitz for free, in order to have sufficient water as an influx will be experienced.
“The port will not only be used to export ammonia but also other minerals and products such as zinc, phosphate and manganese,” he stated.
