The Electricity Control Board (ECB) has approved a tariff deviation aimed at mitigating the impact of electricity price increases on consumers.
ECB Chief Executive Officer Robert Kahimise says effective from 1 July 2024 to 30 June 2025, approximately N$365 million will be allocated to subsidise electricity consumers, and ensuring tariffs remain unchanged from the previous year.
This comes as the Board approved an 8% increase in NamPower’s bulk electricity tariff for the financial year 2024/2025.
Subsequently, major distribution utilities announced their tariff approvals on 27 June 2024, with the new rates taking effect from 1 July 2024.
“Following the plight of the nation on the affordability of electricity, the Minister of Mines and Energy (MME), engaged the ECB, to collectively look into the plight of electricity consumers. In this regard, the Government resolved to avail [sic] approximately N$365 million to subsidise electricity consumers for the 2024/2025 financial year effective 1 July 2024 to 30 June 2025,” said Kahimise.
He added that from the amount, N$221 million will bolster NamPower’s operations, while N$144 million will assist distribution utilities in cushioning customers from tariff hikes.
Meanwhile, the ECB will engage licensees to discuss strategies for meeting approved revenue requirements for the 2024/2025 financial year.
Kahimise noted that this comes as the ECB has implemented targeted social tariffs (e.g., pensioner, low-consuming household tariffs) and integrated an assessment metric into its annual tariff review process to gauge their impact on vulnerable groups based on the percentage of household income spent on electricity costs.
“Assessment of the impact of tariff approvals on the economy; Implementation of the MSB market model aimed at reducing imports and generation tariffs; The utilisation of the Long Run Marginal Cost Fund (i.e. construction of the 20MW Omburu PV Plant with a tariff of 16 cents/ kWh, and to cushion price increases),” he added.
The CEO highlighted that there is a substantial shortage of energy in the Southern Africa region at this stage and this situation will prevail over the next several years until enough new generation and transmission capacity has been built; thus putting pressure on energy tariffs not only in Namibia but in the entire SADC region.
“Specifically, the drought situation in countries where Namibia imports power from such as Zambia and Zimbabwe, it is necessary that Nam Power has sufficient funds to procure power from alternatives when necessary to ensure security of supply,” he said.
This comes as the City of Windhoek faced significant public backlash over its 7.9% tariff hike, despite contending that the increase primarily stemmed from rising costs associated with electricity imports by NamPower.
“Regrettably, the City of Windhoek currently has limited options to mitigate these costs. If the City of Windhoek buys electricity from NamPower at a high cost and sells it to its consumers at a lower price, the City will end up in a position where it will be unable to pay NamPower, and in turn, NamPower will be unable to pay its regional suppliers,” the city noted.
Last month EcB approved NORED’s 6.6% increase with the condition of submission of audited 2022 financial statements, while CENORED received a 6% increase instead of its proposed 7.5%.
Okahandja and Omaheke experienced 6.2% and 1.5% tariff increases, respectively.
Erongo RED’s increase was adjusted to 6.6% from its 7.3% proposal, KEBU received a 6.4% increase instead of 7.1%.
Meanwhile, Oshakati Premier Electric applied for a 7% increase but received 6.4%, and Rehoboth Town Council saw a 6.4% rise from its 8.9% proposal.
