Namibia Power Corporation (NamPower) says it intends to proceed with the disconnection plan for defaulting local authorities, despite a directive from the Cabinet to halt power stoppages.
The power utility said the decision is motivated by NamPower’s commitment to the financial sustainability of the company and the uninterrupted supply of electricity in the country.
This comes after NamPower recently disconnected various localities around the country that owe the utility at least N$1.5 billion after Cabinet issued a directive to the national power utility not to proceed with power disconnection for the defaulting local authorities.
“NamPower would like to clarify that the company did receive the communication on the Cabinet Directive from the Minister of Finance and Public Enterprises. However, after due consideration, the Board of Directors unanimously decided to exercise its fiduciary responsibilities towards the company and to protect the interest of the company and stakeholders,” the utility announced on Wednesday.
Moreover, NamPower said the Board of Directors and Management have resolved to proceed with the disconnection plan because it is in the best interest of the financial sustainability of the company and the sustainability of electricity supply in the country.
“Disconnecting defaulting customers was the last resort after exhausting all existing interventions to collect long outstanding debts, as non-payment of debts detrimentally affects the company’s duty to supply electricity to the entire country on a sustainable basis,” reads part of the release.
NamPower argues that the unintended consequence of the sustained failure to collect dues from clients will result in all future borrowings for generation and transmission infrastructure being guaranteed by the sovereign, due to their inability to collect contractually.
“NamPower uses this opportunity to once again plead with its defaulting customers to pay their dues to enable the company to continue delivering on its mandate, that of ensuring security of supply to Namibia,” the company stated.
Earlier this week, the Minister of Finance and Public Enterprises Iipumbu Shiimi summoned NamPower’s management and board to discuss how to avert the electricity suspension which was deployed in northern and southern parts of the country, as a debt recovery mechanism.
In a letter addressed to NamPower’s board Chairperson, Daniel Motinga, Minister Shiimi highlighted that the Cabinet had given a directive to the national power utility not to proceed with power disconnection for the defaulting local authorities.
“Following the issuance of the Public Notices by NamPower announcing their intention to disconnect defaulting Local Authorities, the Ministry requested NamPower to apprise us with information pertaining to the debt settlement by defaulters resulting from the issuance of the Public Notices before instituting power suspensions,” Shiimi said.
The Minister had called for a consultation with the Local Authorities and the Ministry of Urban and Rural Development before any further actions were taken, as he appealed for calm but to no avail.
Shiimi’s intervention was prompted by the Cabinet directive for NamPower to put on hold the planned power suspensions.
“On our end, we have called for a meeting with the NamPower Board and Management to obtain an explanation why they failed to provide us with the information we requested and comply with the Cabinet Directive, as well as to ensure compliance, going forward,” remarked Shiimi, while also appealing to Local Authorities with high debt to approach NamPower and make payment arrangements.
“This is important for the operations of NamPower to remain sustainable,” he charged.
NamPower’s Managing Director Simson Haulofu on Monday told The Brief that only N$174 million of the N$842 million owed by defaulting clients has been recouped so far, while the remainder is a national clientele debt including N$74 million in interests.
The planned power cuts in the first stage were intended to last for four hours, and on Tuesday, NamPower planned to effect stage two by increasing the downtime to eight hours, then 12 hours in stage three.
These measures were expected to continue as the days progress without any full payment, advancing to stages seven and eight, where the cut-off time will be adjusted to between 24 hours and 28 hours, respectively.
The power utility had issued a month’s notice to switch off defaulters.
