MAY, 2019
ENERGY & SUSTAINABILITY News & Analysis
Is Water Financing in Namibia Ever Going to be Enough?
IN THIS MONTH’S ISSUE: Budget Allocation for WaterRelated Projects A Call for More Investment in Oil and Gas Exploration Namibia's Data Portal on Rural Electrification
The Official Country Briefing of RDJ Consulting
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MAY, 2019
IS WATER FINANCING IN NAMIBIA EVER GOING TO BE ENOUGH? Implementation of any form of strategic intervention such as desalination, consumer awareness raising etc. requires designated funds, and all eyes are on the 2019/20 fiscal year national budget allocation for the water sector. What did the government decide as the allocation for Namibia’s water sector and water projects this year? Read more inside... For some exciting opportunities to advertise, do a brand cover or publish an article aligned with our objectives please contact: marketingcomm@rdjconsulting.co.za
Editor: David Jarrett RDJ Consulting Services CC Author: RDJ Consulting Interns* PO Box 23738 Windhoek, NAMIBIA Telephone: +264 61 400 171 Email: briefing@rdjconsulting.co.za Visit our website for more information about us at www.rdjconsulting.co.za
RDJ Consulting Services CC is an advisory consultancy to the Energy, Water and Transport Sectors with a focus on sustainable operations and renewable energy. This report is a FREE Publication and was prepared by RDJ Consulting Services CC based in Windhoek, Namibia. The content is collated from publicly available information and so its accuracy cannot be guaranteed.
MAY, 2019
CONTRIBUTING AUTHORS
Contributing Author: Fares Shipaxu (Lead researcher & statistician) RDJ Consulting Services CC Contributing Author + Layout & Design: Gabriella Bock (Freelance Marketing & Communication Officer) RDJ Consulting Services CC Contributing Author: Kina Indongo (Marketing & Communication Intern) RDJ Consulting Services CC Contributing Author: Olivia-Joan De Celestino (Marketing & Communication Intern) RDJ Consulting Services CC Contributing Author: Selma Taapopi (Marketing & Communication Intern) RDJ Consulting Services CC Contributing Author: Johannes Sakaria (Statistics Intern) RDJ Consulting Services CC Contributing Author: Peter N. Haufiku (Statistics Intern) RDJ Consulting Services CC
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MAY, 2019
CONTENTS 6
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Quick Facts
Is Water Financing in Namibia Ever Going to be Enough?
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Economy at a Glance
Oil & Gas
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Uranium
Electricity
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Renewable Energy
Water
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The Environment and Sustainabilty
Telecommunications
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Roads and Transport
Financing
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Tenders, Careers and Events
Who's Who
MAY, 2019
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MAY, 2019
QUICK FACTS Population size: 2.3 Million Employment: 66.6% Literacy rate: 89.0% GDP Growth (2018): -0.1% Repo Rate: 6.75 % Interest rate (Prime): 10.5% Inflation (CPI): 4.5% Industries: Tourism, Mining, Fishing Telecom (sophistication): LTE Mobile - cell phones: 2.575 million Subscribers Water availability: 8,800,000 cubic litres/capita Electricity Gen. (Local): 484.000 MW Electricity Demand (all): 629.000 MW
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MAY, 2019
Is Water Financing in Namibia Ever Going to be Enough?
Authors are both Economists and Researchers at RDJ Consulting Ms. Chilombo Olga Priscila
W
ater is Life! As a result, water needs in Namibia has noticeably become the most highly debated topic recently.
The failure in obtaining enough rainfall this season has left everyone with questions on what should be the way forward. Clear indications are that all dams have reduced levels, river levels have dropped significantly and the well treasured underground aquifers have not obtained enough recharge water, while the limited surface water continues to evaporate due to the hot weather conditions experienced. The various municipalities now have to seriously consider their respective wise water management strategies that will make good use of the existing water availability and water sources until further fresh supplies flow in. This form of water management implies prohibiting or minimizing the use of water in activities such as irrigation, car wash, etc. especially in towns, as the City of Windhoek already announced to its residents lately. Other methods will be the rehabilitating of old
"it is important that the outreach strategies to the public will yield results"
Mr. Fares Shipaxu
water sources to provide more adequate water, as well as looking at other optional water supply projects such as desalination. Implementation of any form of strategic intervention such as desalination, consumer awareness raising etc. requires designated funds, and all eyes are on the 2019/20 fiscal year national budget allocation for the water sector. What did the government decide as the allocation for Namibia’s water sector and water projects this year? On 27 March 2019, the Minister of Finance released his 2019/20 Budget Speech, in which Government’s expenditures for the different Ministries were allocated to cater for operations and expenditures during the 2019/20 fiscal year. The total Budgeted Expenditure for 2019/20 was revealed to be N$66 549 697 000, while the total Budgeted Revenue stands at N$58 229 618 000.The Government Expenditure by Department for 2019/20 is depicted in the figure below, which brings a comparison between expenditure in the current and previous financial year.
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MAY, 2019
"With the new drought relief interventions this budget is likely to overshoot"
Figure 1: PWC Representation of 2019/20 Government Expenditure for each Ministry
From the graph, it is clear that the total expenditure for the Ministry of Agriculture, Water and Forestry (MAWF) has remained constant, i.e. 10 percent of the total Government expenditure. This means that allocations for the water sector may not change much either, despite a reduction in water volumes available this year, in comparison to the preceding year, 2018.
This will be achieved through the “Water security Infrastructure Project” and it is expected to receive N$3 billion of the N$6.1 billion budgeted for the Ministry over the MTEF (2019/20-2021/22 fiscal years). The project aims to remove water scarcities in the country and provide shelters water harvesting during rainy season such as construction of earth dams and canals. The Green schemes on the other side, are ongoing According to the Medium Term Expenditure Framework projects, and were allocated N$100 million during (MTEF), the MAWF received a total budget (excluding 2019/20. interest paid) of N$1 959 307 000 for 2019/20 fiscal year, of which the operational budget is N$ 948 077 With the new drought relief interventions this budget is 000. From this, the water sector is projected to receive likely to overshoot, leading to possible government N$686 333 000, which represents 35 percent of the debt, in the absence of investments in the water sector. Ministry’s budget. The Minister of finance outlined in This is seen through the reduction of water supply his 2019/20 budget statement that N$469 million, which expected. Therefore, investors in water project can be forms part of the water sector projections is budgeted highly encouraged to invest in Namibia, especially in for “water generation and infrastructure refurbishment”. rehabilitation water storage, purification and distribution facilities, as well as implementation of In addition to support from the MAWF, the Ministry of possible desalination technology projects. Urban and Rural Development also received a total of about N$5.8 billion over the MTEF, which it directed to Meanwhile, it is important that the outreach strategies support increasing provision of sanitation, serviced to the public will yield results. We therefore appeal to urban land and bulk services for water, sewage and the public to adhere to the strategies and policy electricity. recommendations made by the authorities in order to assist them in effectively managing the available water. The notable priorities highlighted in the projections for the water sector are provisions of potable water for rural areas, water basins management plans for ease of standardized sanitation.
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MAY, 2019
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ECONOMY AT A GLANCE Towards a Food Self-Sustainable Nation
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ood self-sustainability is an issue that has been in question lately, especially in the absence of enough rainfall this year to sustain farming.
Namibia is reported to become food self-sustainable over the next two to three years because of the existing aquifers that provide water, the blue economy, a huge agricultural workforce, and almost half the population commanding great expertise and skills to produce food for the entire nation. However, in order to reach the goal of food self-sustainability, the Minister of industrialization, trade and SME Development advised during the April 2019 crayfish festival in LĂźderitz that
the country must pool efforts and resources to attract serious investors to the agricultural sector for the production of essential food and other important consumables to be distributed countrywide at affordable prices. He further acknowledged that Namibia has a lot of work to do to become food self-reliant, due to the constant import of goods from South African suppliers and producers at the expense of Namibians. However, the strategy in place towards industrialization has the right ingredients to deliver strategic outcomes, he said.
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MAY, 2019
OIL & GAS June 2019 Fuel Price
Facts
The Ministry of Mines and Energy announced that the fuel pump prices for June 2019 will increase by 30 cents per litre (c/l) on all controlled products, Unleaded Petrol 95 and Diesel 50ppm, effective on 5th June 2019. Included in the 30 c/l adjustments is 6 c/l for the Dealer Margin. The increase effects will be as follows: 95 Octane Unleaded petrol: N$ 13.05 per liter Diesel 50 ppm: N$ 13.63 per liter
According to the Namibian import statistics for 2018, the country spent more than 11.4 billion NAD on the imports of oil, gas and their refined products.
Exxon Mobil to extend exploration in Namibia
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xxon Mobil, a multinational Oil and Gas Corporation was granted permission to increase its exploration acreage in Namibia, with the addition of approximately 28 000 square kilometers. This was done after signing an agreement with the Government and the National Petroleum Corporation of Namibia (NAMCOR) for blocks 1710 and 1810, as well as another farm-in agreements with NAMCOR for blocks 1711 and 1811A. For the first two blocks, Exxon Mobil holds a 90 percent interest, but will assign 5 percent of its interest to a local Namibian company, while Namcor holds a 10 percent interest. As for the second two blocks, ExxonMobil holds an 85 percent interest, while NAMCOR retained a 15 percent
MAY, 2019
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URANIUM
"Mining contributes to 25% of the country's income. It is the largest contributor to the Namibian economy." BDO Namibia
Merenica gets new uranium exploration licenses
M
arenica Energy limited was granted with four additional uranium exploration licences by the Ministry of Mines and Energy, namely EPL 7278, 7279, 7368 and 7436 in April 2019. This move has increased their ground position to 308 square kilometres in the Erongo region's recognized uranium mining area, which accommodates several other world-class uranium mines. Marenica Energy has now attained a 100% ownership of the Namib tenements, mainly due to positive change observed in the Namibian government's position with regards to ownership of EPLs in the country.
Rossing Uranium production update
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n the 6th May, 2019 the Managing Director of Rossing uranium Limited launched the Company’s Stakeholders Report for 2018 and revealed that its uranium oxide production for the year 2018 increased by 17.5 percent, i.e. from 2110 tonnes to 2497 tonnes in 2017. This has seen its revenue surging by 5 percent and a net profit of N$166.5 million as price of uranium increased to US$28.82 per pound, compared to the price of US$22.77 it sold in 2017. He, however, stressed out that despite this good performance the uranium sector is still not doing well as they still have to maintain economies of scale running.
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MAY, 2019
ELECTRICITY NamPower to Decrease Electricity Tariffs The Namibian power utility, NamPower will decrease its electricity charges by N$0.04, i.e. from the current N$1.69 kWh to N$1.65 kWh as of 1 July 2019. This represents a 50 percent decrease in bulk tariff from 2018’s increase of N$0.08. The ECB outlined that the decrease’s approval was motivated by the fact that the utility’s demand for power is currently affordable and will allow it to operate at cost recovery rate.
Namibia Single Buyer Market Model to Come To Life
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he Namibian cabinet has approved the modified Single Buyer Market Model for the supply of electricity with its implementation expected to in September 2019.
This is a model which allows electricity consumers and independent power producers (IPPs) to transact with each other directly for the supply of electricity, and therefore opening up competition as well as private sector investment in the electricity provision sector. Meanwhile, Ministry of Finance reports that during the 2019/2020 financial year, the country’s energy supply needs such as improvements and access to energy will be met with N$81 million. Of the 81 million, N$54 million will be allocated to the needs of electrifying schools and N$5.3 million will be for the Energy Fund.
SUBSCRIBE! Namibia's electricity demand stood at 652 megawatts in December 2018, excluding the Skorpion Zinc mine, which gets its electricity supply directly from Eskom. The country increased local generating capacity from 400 megawatts in 2015 to 557 megawatts in 2018 through NamPower and IPPs.
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MAY, 2019
RENEWABLE ENERGY Tackling Climate Change via the Promotion of Renewable Energy
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enewable energy sources have an expansive potential to dislodge discharges of ozone harming substances from the burning of petroleum products (fossil fuels) and along these lines to relieve environmental change. The most present extreme effects of changes in environment may be kept away if endeavours are made to change current energy frameworks. This involves extending these endeavours to all the communities and this is what the Namibia Red Cross Society is doing. As of 4 April 2019 the Society collaborated with the European Union in giving renewable energy promotion projects which also entailed efforts of mitigating climate change to the regions of Kavango west and east, in the villages of Sikondo and Sharukwe and Mayana village respectively. Projects involved a floating solar-powered pumping system
To-date, Namibia generates 27% of its electricity needs as per NamPower's 2018 Annual Report. Imported electricity resulted in a payment of approximately N$2.4 billion. [p.97]
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MAY, 2019
Namibia's Data Portal on Rural Electrification Author: Mr. Fares Shipaxu An Economist and Researcher at RDJ Consulting
A
gateway for data/information on electrification status in the country has been developed by four students form the Worcester Polytechnic Institute in the U.S. It was done in a space of less than four months under the supervision of the Hanns Seidel Foundation which hosted them as interns. The portal was launched on 02 May 2019 during a stakeholder workshop where it was also handed over to the Ministry of Mines and Energy (MME). The workshop aimed at seeking feedback and input from the participants, and sharing of information amongst stakeholders. The data portal enables viewers to get real time imagery on electrification status. One of the methods used by the students to collect data was engaging stakeholders such as the United Nations development Programme, Namibia statistics agency, Regional Electricity Distributors (ErongoRED, CENORED and NORED), National Power Utility (NamPower), MME, MoHSS and MoE. The latter stake holders provided information/data on clinical data, regional, distributions by locality, substations, hospitals, and schools respectively.
The data portal This consists of navigation tabs which allows you to navigate through any place or region to find out its electrification status. Places include schools, health buildings etc, and information for each place or region can be based on: Demographics in schools or hospitals Education statistics Income and spending statistics Household statistics The dashboard (illustrated on Figure 2 below) provides electrification status (electrified or not) of places such schools, health facilities, government offices, etc. and rules out electrification status by source. Other than this, the portal also displays Maps, Redial tool, power line view, satellite.
How does the database strive to prevent the visitors from getting old information? Until the launch day, HSF was the body to sustain the portal (Administrator). However, this is likely to change as stakeholders are yet to agree on who the main sustaining body (ownership) should be. The table below outlines how the portal could be sustained in a timely manner.
Despite missing data from some of the stakeholders, the team recommended that more data on past electrification, REDs supply and health related building are needed to fill up gaps and provide more reliable and sufficient data.
Figure 2: A screenshot of the Interactive Prototype Data Portal
Meanwhile, the existing prototype data portal can be accessed here, while the Prototype Feedback Survey found here.
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MAY, 2019
WATER
Figure 4: Author’s compilation of Namibia current dam water levels. Data Source: NamWater Weekly Dam Bulletin
Budget Allocation for Water-Related Projects Water loss from Hardap Dam About 3.5 billion litres of water that was being transported from the Hardap Dam to the Nerckatal Dam, a distance of 123km, has evaporated before reaching the intended dam. This water was supposed to feed the N$ 5.7 billion Nerckatal Dam Project. With NamWater’s current rate of N$15 per cubic metre, the estimated cost of the water loss stands at N$52.5 million
T
he Namibia agricultural sector has been allocated with N$1.5 billion for the current fiscal year (2019/20) and is going to be financed with a total amount of N$4.2 billion throughout till 2021/22 fiscal year. See Figure 5.
On 02 May 2019, the government of Namibia, through the Ministry of Information and Technology (MICT) announced that it has decided to take measures in containing the drought situation in the country. The recently experienced drought has has affected everyone, especially farmers who keep losing their livestock. This was declared as a state of emergency by the President, under Article 26 of the Namibian Constitution on account of the natural disaster of drought.
Figure 5: Author's compilation of water projects budget allocations for 2019/20 fiscal year.
The water-related projects which form part of Drought relief interventions are shown on Figure 6. Figure 6: Author's compilation of Water related projects that are part of Drought relief interventions.
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MAY, 2019
Windhoek's Water Supply as of 2019 to 2020
Figure 6: General guide for drought response in relation to dam contents and remaining period of supply. Sorce: City of Windhoek - CoW
CoW Media Release: Monday, 13th May 2019 "The rainy season for 2018/19 ended at the end of April this year. NamWater, after assessing the supply situation, announced the supply outlook for the following two years 2019 to 2021, but in particular the remainder of this year until the next rainy season. The City of Windhoek would like to inform our residents that NamWater will only be able to supply Windhoek with 163 712 m3 per week as oppose to the required 539 350 m3 per week as per the projected demand for the 2019/20 period."
MAY, 2019
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THE ENVIRONMENT AND SUSTAINABILITY Creating Opportunities Through Waste Management
T
he Environment Investment Fund (EIF) is the channel through which environment-related projects for maintaining biodiversity and economic development enhancement are funded in Namibia. The EIF also provide grants for initiatives that support conservation, create jobs and promote the efficient use of natural resources with the clear aim of ensuring their long-term use. In April 2019, Pupkewitz in partnership with Kaap Agri Namibia donated N$60 000 as part of their Corporate Social Responsibility to the sustainability of Namibia's environment and ecosystem through the Break Free From Plastic Campaign, initiated by
Pupkewitz in 2018. Pupkewitz Megabuild Managing Director reported that the money donated was sourced from the campaign, which charged an amount of N$0.50 cents for every plastic bag used by to their customers. With this, the project would be handing over quarterly what they collected to the EIF for investments into environmental and waste management initiatives. Furthermore, with the 30% of environmental taxes approved by cabinet in 2018 to be channelled to the EIF, a comprehensive environmental education and awareness programme on waste management could therefore be launched by EIF in due time
MET Office at Ndiyona to Close Down
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fter being in operation for 20 years now, the Ministry of Environment and Tourism (MET) has decided to close down its sub-office in Ndiyona Constituency in Kavango East due to mainly administrative issues. The office served Ndiyona, Mukwe, Ndonga Linena and Mashare constituencies, and was mainly responsible for national parks and wildlife management in the area.
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MAY, 2019
TELECOMMUNICATIONS A Means of Connecting Local Entrepreneurs to the World
Bank Windhoek Launches a Virtual Assistant App
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B
aratus Namibia, a division of Paratus Africa Group and Dololo, who’s aim is to develop the entrepreneurship ecosystem in Namibia recently joined their expertise through DoBox, a local business incubator and co-working space for entrepreneurs, to bring local businesses closer to the world through a fibre-fast access to the internet.
ank Windhoek introduced the “Hey Jude” app on the 30th of April 2019, which is reported to be the first app for mobile assistance worldwide.
The Hey Jude for Bank Windhoek App is operated by humans with the assistance of artificial intelligence. The app which is a subscription-based service works in such a way that it uses human intellect, coupled with emotional aptitude and technology to carry out to-do lists on behalf of customers.
MAY, 2019
ROADS AND TRANSPORT TransNamib Gets New Brand Identity
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he local Railway service provider TransNamib recently transformed its brand identity with a new logo and slogan portraying rail transport at the railway station in Windhoek.
Due to the fact that TransNamib previously offered road, rail, air and port services, but currently only offers rail services, the company therefore decided to change its brand identity to reflect the current services offered. The Brand change addresses the company’s new goal of being the preferred bulk transporter of Namibia its and road-to-rail strategy. At the rebrand launch, TransNamib chief executive officer said they have undergone growth in the past ten years with about 8% in freight volumes. Smith however maintained that TransNamib still has a long way to go in terms of size and customer base. The new brand identity is part of TransNamib’s overall Integrated Strategic Business Plan which will be introduced in stages during the next five years.
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MAY, 2019
FINANCING TransNamib’s Project Gets Subsidised
A call for more investment in oil and gas exploration
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amibia held its third International Oil and Gas Conference at the coastal city of Swakopmund from the 24th to the 25th April 2019, under the theme “Building Partnerships to Transform Africa’s Oil and Gas Industry”. The programme covered themes and challenges relevant to the industry from recent exploration activities, financing projects, petroleum infrastructure and logistics, fuel supply, refineries, creating an enabling environment, regional trends, building capacity, collaboration and lessons-learned.
ransNamib received N$171 million on the 13th of May, as a subsidy for its five-year turnaround strategy. This amount is intended to be used to be used to fund its five-year business plan, launched in 2018 which required over N$2 billion for its successful implementation. Initially the Parastatal aimed to Finance the project independently. However, the ministry of Works has allocated N$171 million of its N$4 billion budget to the TransNamib five-year business plan to push forward the project. This amount is said to only cover some of TransNamib's financial obligations. Therefore, the national railway operator would be expected to generate its own funds, particularly from their properties, including the leveraging and sales of its non-core and unattached properties in order to generate funds.
Deep Yellow gets funding for their Nova Joint Project
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eep Yellow Limited has gladly announced that Japan Oil, Gas and Metals National Corporation (JOGMEC), who are sole funding the Nova Joint Venture (Nova JV) in Namibia, has approved a program and budget of $1.05M covering till March 2020. The project which has three partners Nova Energy (Namibia) Pty Ltd, Nova Energy Africa Pty Ltd and Sixzone Investments (Pty) Ltd aims to explore uranium for the EPLs 3669 and 3667. The partners have 65 percent, 25 percent and 10 percent respectively. “Work on the Nova JV is focussing on target definition and drilling to test for both basement related uranium targets (Rössing/Husab style deposits) and palaeochannel/calcrete associated uranium targets (Langer Heinrich style deposits)".
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During the Conference, the Minister of Mines and Energy highlighted the necessity of making new reserves discoveries in Southern Africa, as well as the important role that financing such discoveries play in making further explorations in Namibia. The Minister therefore invites investors to continue exploring the country's offshore areas for oil and gas as a way to capitalise on the favourable petroleum tax regime being offered through world economic powerhouses. He informed that the government's petroleum income tax is levied at 35%, state royalty at 5%, and a negotiable additional profit tax when the internal rate of return is greater than 15%. The country's petroleum tax regime and incentives are some of the most favourable in Africa, and this brings about equitable sharing of economic benefits for the investor and the country with reserves. According to RichAfrica Consulting’s Managing director who was present at the event, Africa has about 7.5 percent and 7.1 percent of global oil and gas reserves respectively. However, the prices of energy at global levels are steadily picking up, therefore, it is high time that Africa’s Gas and Oil industry players collaborate to allow for an investor pull-factor in the continent.
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MAY, 2019
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MAY, 2019
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