The Namibia Power Corporation (NamPower) is grappling with unpaid customer debts , which have pushed its total outstanding overdue debt to N$960 million.
The utility has recorded N$157 million in expected credit losses for the 2024 financial year, citing widespread non-payment as a major factor straining its financial stability and hindering critical infrastructure investments.
This comes as NamPower seeks a 17.44% tariff increase for the 2025/26 financial year, driven by its ongoing inability to recover costs through current tariffs due to regulatory constraints.
The company has requested the increase to meet its N$8.8 billion revenue requirement for the period, covering key expenses including energy costs of N$5.6 billion, fixed costs of N$1.4 billion, and N$2.2 billion for return and depreciation.
NamPower’s Senior Manager for Electricity Pricing and Financial Modelling, Christo Visser, said the requested increase is essential to cover rising energy supply costs, depreciation, and infrastructure development while addressing past revenue shortfalls.
“One hundred and fifty-seven million was impaired in 2024, and our total outstanding debt has now reached nearly N$1 billion. This is a huge financial burden that we can’t recover directly through tariffs, and it puts us at great risk,” Visser said.
He said accumulated debts represent a significant operational challenge for the company.
“This debt, which has been unpaid for extended periods, is causing significant cash flow problems. We can’t continue to operate like this without a tariff adjustment,” he said.
Visser also noted that regulatory restrictions limit NamPower’s ability to recover these debts through immediate tariff increases, further exacerbating its financial strain.
Meanwhile, Desdemona Lubinda, Head of Electricity Pricing at NamPower, detailed the specific cost breakdown contributing to the tariff increase application. According to Lubinda, energy supply costs account for a significant portion of the required increase.
“Energy costs account for 64% of the total revenue requirement, while depreciation and return take up 25%, and fixed operational costs make up 16% of the total,” Lubinda explained.
She highlighted the key components behind the proposed 17.44% tariff hike. “The 17.44% tariff increase is made up of 9.1% for return and depreciation, 1.5% for fixed operational costs, and 3.3% for energy supply costs,” Lubinda said.
Lubinda also pointed out that while NamPower experienced an over-recovery in 2024, it still faces challenges in recovering the full amount necessary to cover operational costs, particularly from previous years where under-recoveries occurred.
Further data shared by Lubinda indicates that NamPower supplied 47% of the national electricity demand in 2024, with imports covering 46% of the country’s needs. She noted that Namibia’s reliance on imported energy, along with rising fuel costs and inflation, will contribute to future pricing pressures.
“As we anticipate a greater reliance on imported power, alongside increased fuel costs, it will directly impact the future cost structure of electricity,” Lubinda warned.
