The Electricity Control Board (ECB) on Friday announced an 8% tariff adjustment for Namibia Power Corporation (NamPower) for the 2024-2025 financial year, a reduction from the 14.59% initially requested by the national power utility.
The ECB, however, expressed concerns that these adjustments, surpassing local inflation rates, may exert pressure on commodity prices.
Robert Kahimise, CEO of the ECB, stated that: “After careful consideration and in line with the ECB tariff review process, the board has decided to adjust the NamPower bulk tariff to 8%. This adjustment revises the average tariff from the current approved rate of N$1.9856 per kWh to N$2.1444 per kWh, effective from July 2025 to June 2026.”
The forthcoming adjustment, effective in July, is lower than the 9% increase implemented for the 2023/24 fiscal year.
Kahimise further elaborated on the ECB’s forecast, indicating a double-digit increase of up to 14% for the 2025/26 financial year, followed by reductions to nine, four, and 5% in subsequent fiscal years from 2026/27 to 2028/29.
“In accordance with the tariff regulatory framework, the ECB conducted a thorough review, assessing the tariff application’s detailed analysis, financial impact on NamPower, optimal dispatch of local generation versus contracted imports, and overall economic implications. Consequently, NamPower’s revenue requirement has been adjusted from N$8.4 billion to N$7.9 billion,” emphasized Kahimise.
He added that NamPower generates revenue based on approved budgeted costs, volumes, and tariffs.
“However, actual costs and revenue often deviate from budgeted figures, resulting in annual over or under-recoveries. Therefore, the ECB has deferred under-recoveries to alleviate the impact of electricity costs on consumers.”
Kahimise attributed the under-recoveries to lower-than-projected generation from the Ruacana Power Plant, necessitating higher-cost imports to compensate.
Pinehas Mutota, ECB Executive for Economics and Market Regulations, acknowledged the significance of tariff adjustments in ensuring power stability and continued generation but cautioned about their potential impact on the economy.
“Given that the tariff increase exceeds the inflation rate of around 4.5%, we anticipate pressure on future inflation and consequently on prices of goods and services,” stated Mutota.
He justified the increment, citing rising generation costs, particularly expenses associated with imported electricity.
“Approximately 42% of generation costs are denominated in US Dollars, making exchange rate fluctuations directly affect the generation tariff. For example, electricity costs have increased by 10% since last year due to the exchange rate shifting from N$17.50 to around N$19.22 against the US Dollar,” explained Mutota.
Mutota also highlighted factors such as capitalisation costs of the Anixas II power station, inflationary pressures, and commodity-related escalations.
In light of the bulk tariff adjustments, the ECB urged distribution licensees, including Regional Councils, Local Authorities, Large Industrial Transmission Customers, and Regional Electricity Distributors (REDs), to apply for tariff upgrades.
