The Ins and Outs of ECB and Namibia power as told by Siseho Simasiku
Ten years after gaining independence, Namibia, driven by the pulsating vigour of a young nation and eager to grow its economy, established an independent electricity regulatory body; the Electricity Control Board. It was to exercise control over the electricity supply industry with the main responsibility of regulating electricity generation, transmission, distribution, supply, import and export in Namibia through setting tariffs and issuance of licenses. The man at the helm of this institution since its birth in 2002 is Engineer Siseho Simasiku (SS) who unravels some of the myths associated with ECB and the electricity supply industry.
PF: Who is Siseho Simasiku?
SS: Siseho Simasiku is a Namibian born. My parents were also born in Namibia. In fact, my father was born in 1907 but he died in 1959 before I left for exile. I was born in 1947 and started going to school in 1958. I can say my first paying job started in 1978 when I became a lecturer at the University of Zambia in Electrical Machines and Power Systems. I worked there for a year and then I moved to Zesco (Zambia Electricity Supply Corporation) for three years. I was politically active until 1992. I started working for the Ministry of Works, Transport and Communications as an Assistant Engineer. In 1993, I joined the Ministry of Mines and Energy as a Chief Energy Researcher. In 1995, I was appointed Director of Energy and in 1997, as the Permanent Secretary of Mines and Energy. In 2000, I became the CEO of Electricity Control Board. So I have been the CEO for this organisation since 2000. My qualification is electrical engineering but I specialised in nuclear power plants construction, and operation of nuclear power plants. I think I could have been the first black Namibian in nuclear engineering especially in heavy currents. I qualified for that in 1978 from Slovak Technical University in Czechoslovakia. When I joined the Ministry of Mines and Energy as Chief Energy Researcher, I think I should mention as one of my achievements, the establishment of the Revolving Fund on Renewables. The fund was established with the assistance of the German GTZ, the Norwegian NVE and it is still operational. When I became Director of Energy, one of my responsibilities was to administer the national energy policy and by that time, the policy did not exist. I asked my colleagues including Paulinus Shilamba, who is now the Managing Director of NamPower. Assistance was also sought from GTZ and received a lot of assistance from Norway both financially and technically. The aid was to help us in the development of the White Paper on Energy Policy of 1998 is currently under review was the first CEO of the regulator and I have been there all this time sorting out all the issues concerning the restructuring of the industry. In addition to that, I was asked by other regulators to form what is today called the Regional Electricity Regulators Association of Southern Africa (RERA) and was the first chairman. I participated in the creation of the African Forum for Utility Regulators. I am also the chairman of an international confederation of energy regulators based in Italy. Briefly, this is what I can say Siseho Simasiku is.
PF: The ECB has been approving increases in electricity for the municipality of Windhoek and the ESI. Are there any genuine engagements within the country to moot ways of increasing Namibia’s generation capacity?
SS: Namibia still depends on 60% imports from South Africa, Zimbabwe, Zambia, DRC and Mozambique for our needs. This is indeed a heavy dependence on imported energy. In Europe for instance, in areas where sunlight is limited, people are still using the solar energy to generate electricity and every house generates electricity enough for its use during a particular time of the day and sells the excess. We have been talking about this in Windhoek and there is a school as you go to the airport that has been generating more that 200 kilowatts of solar power. I think the excess power generated during the school holidays has been bagged within the city of Windhoek network. NamPower uses the same method when Ruacana generates more power. But you and I, in our houses, can use the sunlight in Namibia to generate power that can be fed into the network of the city and through that, we can make money but it’s an issue that has not been fully discussed.
The other way is, there could be smaller generators that could put their generation plants in towns and instead of connecting the plants to NamPower network and they could connect to the distribution network of the town. That could significantly reduce the amount that NamPower brings in. But these are issues we are still discussing with everybody that is involved. It would be difficult to say how many such plants would be needed in Windhoek. As I have said, renewables are still very expensive. If there is a policy on renewable energy projects that is supported by government, groups such as GIPF and Social Security can invest into such projects.
PF: The prices of electricity in the country have gone beyond the reach of the poor and middle class. Have there been any plans to make electricity available to the poor people through the use of green and solar energy?
SS: There is an understanding that we have poor people and those poor people need to be assisted. Therefore, the Electricity Control Board is coming up with a project this year to look at the pro-poor tariffs. That should be viewed as a temporary situation because as we move towards the year 2030, the number of people who cannot afford electricity should be reduced. According to the ECB, Namibia at the moment uses money (GDP per capita) income as a measure of the economic status of the population. Unfortunately, that is a very difficult measure because if we look at Namibia, there’s only 40-45% of the population that has access to electricity and power being a vehicle of development only about 45 % of the population is engaged in development.
Let us move towards measuring the economic improvement of our people on the basis of electricity and energy they consume per year; each individual, in terms of energy consumption per capita. On average in most countries, the minimum energy per capita is about 2500 units per year this translates to 200 units per month. If we look at the poor people in this country, we refer to those who can consume only 50-100 units per month. If we start moving towards ensuring that our people’s consumption of electricity moves from 50-100 units to 200 units per capita, then we are now talking about a Namibia that has become a more developed country. At this moment, we have a lot of people consuming zero units and 50-100 units per month. Therefore, we must work out something to improve on this because without them having electricity, there is no way they can participate in the development of this country.
PF: Has the ECB come up with a plan to distinguish power consumers from the Regional Electricity Distributors (RED)–industrial area and the house hold consumption in the country in order to regulate power usage?
SS: We are looking at many ways by which it can become easy for consumers to use their electricity. One of the things that we have done is to introduce time of use tariffs. Units consumed during peak time are more expensive than units consumed during standard and off peak period. Before introducing the time of use tariffs, we went on TV and newspapers but also the likes of NamPower did advertisements, but this is not enough. We are putting up a project where everybody who is in the industry will go out to consumers and inform them. At this present moment, the time of use tariffs have been confined to large users of electricity such as the mines, licensee such REDs and local authorities. However households also want to know more but we haven’t done much on that one. I think it is necessary that we go out and seriously talk about this because there are some benefits that we could get from it.
PF: The City of Windhoek has for the past few years been characterized by unregulated and dangerously exposed power points, e.g. The Herero Mall; is the ECB working with the municipality to tap into these points to improve income?
SS: The understanding that we have is that we have the issue of per-urban areas across Namibia where people settle. The reasons are many but one of them is the fact that people think that once they come to these areas, there is a possibility that they can get electricity connection and if they are connected to electricity they can do some business. As a result places like Greenwell Matongo, Herero Mall etc. are some of the places where business activities flourish leading into unsafe illegal connections.
What we have done in acceptance to the fact that these situations exist, we have come up with an idea to develop rules around the resale of electricity. These rules are there. The City of Windhoek can do a lot to normalise the situation in areas such a Herero Mall. In fact, they were just developed last year. The ECB does not have enough staff to carry out inspections. We have a staff compliment of 21 and we are trying to employ inspectors that can be sent out to these areas and sites where construction is taking place to ensure quality of supply and report incidence where corrections need to be done.
PF: The Electricity Control Board (ECB) has been mooting the subsequent move to renewable cheap energy since 2008. How far has that plan gone and how much has been invested in the project?
SS: I must start by saying that renewable energy is very expensive. If you want to generate electricity from renewables such as PV systems and Concentrated Solar Power, you are looking at tariffs between N$ 1.25 to N$ 3.20 per unit. Hydro generated power is half the price of solar energy. Although hydro energy is much cheaper, the problem with our country is that it is not endowed with hydro power resources, particularly if you go to the interior of the country. If we are looking at renewable energy, we focus mainly on wind and solar and we have enough of that. In fact, there are three countries in the region and probably the whole world, South Africa, Botswana and Namibia with abundance of solar radiation.
We have a belt where the readings are best. As a result of that we have been approached by various groups to see how we can come up with some way to exploit these resources. We have been working with the Polytechnic of Namibia to establish the procurement mechanisms for renewable energy. We have been following a certain system whereby people have come to knock at our doors and we have welcomed them and as a result of that we have licensed five groups; three in wind energy and two in solar energy. However, we have not as yet seen the fruits of this licensing. Of the three in wind energy, one is supposed to generate 44 megawatts for 22 years, the other one 60 megawatts and the third, 50 megawatts. But they are still collecting information and that is one of the things that are a problem because we do not have that proper information that can be used for bidding.
PF: Namibia’s electricity generation is still below capacity and there have been very little efforts to boost generation in the country. How much has Namibia, through the ECB invested in construction of power generators and alternative energy sources?
SS: We as ECB do not get involved in generation projects. We assist Government in creating an enabling environment.
However it is important to note that other role-players such as Government and NamPower have invested in new power projects.
PF: How much electricity is the Namibian electricity consumer set to benefit from the recent Caprivi Interconnector Launched recently by Zimbabwe, Zambia and Namibia?
SS: The Caprivi connector was constructed with the help of the Government. The money that Government puts into projects goes a long towards helping electricity consumer by lowering tariffs of the electricity through subsidies of those parts of the infrastructure that the consumer has to pay for. Before this line was build, power from Zambia would come via South Africa travelling all the way from Zambia to here and we would pay wheeling charges. This is not the case now and the consumer is no longer paying for the wheeling charges. If Namibia also generates more than we are consuming, we will use that line to export power.
In terms of Government policy, Namibia should have 75% of its own energy generation and 100% during its peak power. We are not meeting that target. Looking at the region, it is noted that there is no single country in the region which is self-sufficient in electricity. If you look at some of the countries which are supplying us with power, they have power cuts when Namibia does not have that. If we look at Zambia for instance, where we get 50megawatts, it is far from meeting its own requirements. Zimbabwe and DRC as well, are far from meeting their requirements. Namibia should embark upon a process of generating more power than what we are generating at this moment to meet its own requirement and for it to export. The fact that other countries do not have enough power but still export power to Namibia means that Namibia can also generate power and help these countries even if we are not self sufficient. We have the capacity and resources. We are negotiating the Kudu Gases Project which we think will be operational by 2015. We are also in discussion with Angola to develop the Baynes hydro plant. We are planning to put up heavy fuel oil (HFO) in Arandis and other plants in other parts of the country.
We have talked about nuclear energy for generation of electricity. This is also available to generate power and as a nuclear engineer myself, I know what is involved, what is required and what is not required. However let me say that the generation of electricity doesn’t have to be 100% the responsibility of the Government. What the Government can look at is the affordability of power.
PF: Have there been offers from potential investors?
SS: Several, several offers. However, the number one requirement is to the government to level the playing field through policies. I am talking of policies, and I can tell you that the Government has put up those policies as contained in the White Paper on energy policy which is under review. The Electricity Control Board has come up with an IPP (Independent Power Producers) and investment market framework to create a conducive environment for IPP investment. The electricity act of 2007 has made it very clear for ECB to go ahead and promote the integration of the private sector into the energy sector, but, there is one area that is still lagging behind that is negotiation of power purchase agreement between NamPower and the IPP...
Government has come up with policy; good policies on the ground, but implementation of these policies have become the biggest problem. At this moment, we still import up to 60% of our power. So what the Government wanted has never been met. I don’t want to point a finger at NamPower because NamPower also has got its own challenges. In order for the utility to implement some of these initiatives there are certain things that have to be fulfilled on its side. As a result of this, I personally think, and having worked as a civil servant I appreciate the challenges in implementing government policies and there, we are very weak and unless we address that aspect very, very seriously, there is no way we can reach some of the objectives that we have set before ourselves.
PF: The Southern African Development Community plunged into a power deficit crisis in 2008, what is ECB doing as one of the member regulatory bodies to boost power generation in Namibia and also contribute to the regional power pool?
SS: The Southern Africa Power Pool (SAPP), SADC, plunged into a power deficit crisis in 2008. Yes, it is true. We have some consultations with other regulators in the region. The regional electricity regulator association (RERA) - is part of the SADC Secretariat. We attend meetings for energy ministers, as we are under instruction to be in close integration with the SAPP. We are currently discussing these situations to ensure that Namibia and other parts of the region overcome these challenges. Plans were that SAPP should bring 8 000 megawatts into the system over the past five years, but they could only bring in only 2000 megawatts. It was not because SAPP did not want to bring in 8 000 megawatts but there are challenges. Following these challenges, we urge everybody including our governments to get interested in finding out what challenges the utilities are involved in. Those challenges are very important as some of them are political risks and must be addressed without prejudice. We must sit and talk about these issues. Otherwise, it is difficult for this region to attract investors in the ESI.
PF: ECB has been castigated for not coming up with long-term plans to improve Namibia’s power generation and has for more years been promising but no action implemented. Do you concur and what are the limitations?
SS: I do not concur. The integrated resource plan is going to look at the resources for Namibia for generating power for 20 years. This is a proposal that came from the ECB. We are happy to say the Ministry of Mines and Energy has given instructions that we should come through with this project and has given the ECB permission to spearhead this project. We started it in July this year and by July next year we should have had the final document that can be presented to the Ministry of Mines and Energy. This will tell us what the cheapest source is for us to develop our power from and how to get energy to Namibia as a whole. I must say the project is 70% funded by the World Bank and the other 30 % will come from the Namibian government. That will give us a long term planning system that this country needs. One of our responsibilities as ECB besides regulating is to ensure government policies in the energy sector are met. I can tell you certainly that the ECB’s interests are the interests of the Government and as such, we want to tell NamPower that in actual sense, this country needs more power than what it can generate.
It is important that NamPower should never think that the ECB is trying to abandon them. No. It must be able to exist, meet its costs, must be able to do business without asking for money from government all the time and for that reason, we have not become ashamed of the fact that we have asked our fellow Namibians to understand why the tariffs are increasing. In order for NamPower to supply us with power, they have to meet their costs. Its financial strength comes from us the consumers paying for the services. Therefore there is no way ECB can lead NamPower to failing to meet its objectives.
I also want to challenge the private sector and I am not talking about the Americans, or the British only, I am also talking about the Namibians. Namibians should be involved in the ESI development, the likes of Frans Indongo, Pupekewitz, GIPF, Olthaver&List, United Africa Group and Social Security etc … I mean, they all have money; why are they not involved? I have challenged them but they have not stepped up to it. I don’t know what they are afraid of.
PF: How much is the power deficit in the country and what are the best ways of subverting the shortages?
SS: The power shortage is up to 60%. When we talk about power shortage, we talk about what we import and sometimes these become more of political issues because it requires only one politician from the country that we are importing from to say, “To hell with Namibia we are not giving you electricity” and we will be in the dark. However, we are very happy with the bilateral agreements that are there between NamPower and their colleagues and other utilities to cater for 60% deficit we have. We are able to meet our requirements but it cannot continue this way. I have been asked what would happen if Namibia were affected by a blackout.
The Southern African Power Pool is now a commercial entity but the agreements that we get through utilities agreeing with each other may be affected by politics from time to time. That is why by 2010 75% of our energy requirement was supposed to be met locally. You never know what might happen, but it’s an issue that I say; we shall not wait until we have the blackout because if there is blackout, there would be nothing that we could do except to find a way to do away with the blackout. So we must prepare ourselves for the possibility of this and we should not wait for it to happen.
PF: There has been an argument that the country uses too much money to import electricity while they can use that same money to generate electricity locally. Is it true and if so what is being done to change this situation?
SS: Yes, it’s true we are using a lot of money to import electricity but there was a time when ESKOM had more than 8000 megawatts as surplus power. ESKOM by that time was selling that electricity to the people in South Africa at 12 cents per unit but the surplus power was sold to NamPower at probably 8 cents per unit. By that time, NamPower realised that it was much cheaper to import the surplus power than to generate it. The situation has changed. Eskom power is now very expensive.. Last year, ESKOM negotiated with the National Energy Regulator of South Africa (NERSA) to increase the tariff by 25% each year for three years. In three years, the tariff in South Africa will rise by 75% and that is a lot. If we still have to buy it even next year NamPower will have to buy that power at 25% more, we have then to consider how to raise our tariffs by 25% annually to avoid living in the dark. We have no choice here. In order for NamPower to build new plants, the tariff of these power plants will be higher than what exists now.
Again, I have to confess to my fellow citizens that it is possible that if the countries around us where we get the power from increase their tariffs, we will have no choice except to increase the tariffs here as well. If the Government comes back and says, “No, don’t do that, we will put in money.” That’s good.
PF: There are minimum independent power generation players in the country. What have been the setbacks in encouraging independent players in the power industry?
SS: The policies are there but we have issues like negotiations for power purchase agreement, and this is the set-back. Once IPP negotiations are no longer a stumbling bock there will be a rush here by investors.
PF: Most of the countries in the region have adapted to power saving electricity bulbs and other alternative power gadgets. Is ECB by any chances contemplating such moves in the near future?
SS: Yes we have come up with a project where we have studied possibilities which in the end, users of electricity can contribute towards saving energy. This is what is called ‘demand side management’. We have come through with a number of proposals and one of them is the distribution of energy saving bulbs like the implementation of the time-of-use tariffs and the practice of switching off geysers through the ‘ripple control system’. I can say in the distribution of energy saving bulbs, NamPower was able to save some 20 MW. If our people learn how to use electricity in a ways that make them conscious of wrong practices, we will go a long way towards saving electricity. This is important and we are working very hard towards that.
PF: At the time you joined the Ministry of Mines and Energy in 1993, your main focus was to promote renewable energy development. What achievement in this regard, has been made for Namibia?
SS: The Ministry of Mines and Energy has set up an institute at the Polytechnic to look at renewable energy and this is part of the development that has taken place. We have achieved a lot in all other areas as well.
PM: From your experience, does the country have enough mining and energy engineers? If not why and what should be done to bridge the deficit?
SS: There is shortage of skills but what ECB is doing now is to go out and try to recruit engineers that have completed their studies and we have recommended this to NamPower and the REDs that we should create a situation where we should get graduate engineers, train them and expose them to the industry. Because one of the problems is that these people do not have enough or any experience. The deficit is quite acute. If you mentioned nuclear energy, in Namibia we only have a few them working in the health sector.
PF: What are your current challenges?
SS: One of the challenges for the industry is the fact that the distribution infrastructure that we have in Windhoek and other local authorities, was laid before Namibia’s independence and some of the cables were put underground in the 60’s. If they start breaking down, (the cables, the overhead lines and the transformers) getting quick money to replace them would be a very big challenge.
The political will is there and Government has put up policies. What is left is how to implement these policies. The government should also look at the risks that are involved and when we have to bring investors from outside the country. Those risks must be dealt with.
PF: As the Chairperson of the Regional Electricity Regulators Association of Southern Africa (RERA), what measures has the region adapted to cushion the poorer communities from power tariff hikes?
SS: From 2002 when RERA was formed in Lesotho, as an association of regulators, it was formed as a project of SADC. In 2002, the Council of Energy Ministers was dissolved and before the dissolution the Ministers decided that RERA come in to work with SAPP. Today as we speak, we are together in the Secretariat of SADC and we work together on various projects in the region and we consult each other. Yes, we are trying our best to reach our goals. We have come out with a lot of frame works where national regulators can work in these harmonised frameworks and regulations. Some have been accepted in many countries but some have not because we have no influence in instructing the Government to implement them, but of late, we have come up with the ‘cross border trading guidelines’ which have been accepted by the ministers of energy of Southern Africa and they are now ready for implementation. In addition we publish a booklet which compares tariffs in the SADC countries.
PF: Is the energy regional body meeting its goals and objectives? If so, how? And if not, what are the hindrances?
SS: We are part of the International Confederation of Energy Regulators (ICER) and I am the one chairing the virtual working group for security of the Africa region. The seat of that confederation is in Italy. We are also very closely associated with the African Forum for Utility Regulators and with the African Union. In the USA, we are associated with the National Association of Utility Regulatory Commissioners (NARUC) and in the Caribbean Islands regulatory association. We work with all these entities. The only challenge in meeting our goals is the fact that RERA has financial constraints. It depends on membership fees which are very minimal. The fortunate thing is that we have entered into negotiations with various countries and in the beginning, it was Norway which helped us and now Norway and Sweden have come together. The World Bank and German GTZ are also helping us with the funding certain projects.
PF: The Inga Dam Project in the Democratic Republic of Congo had capacity to generate electricity for the Southern African region but due to financial incapacity, the project has gone down. What was Namibia’s contribution to the project and what went wrong?
SS: In the Inga Project, we expected Southern Africa to get 3000 MW from Inga 3 and this would come through the construction of a power line which would connect DRC with Angola, Namibia, Botswana and South Africa. NamPower and other utilities such as ESKOM, BPC of Botswana, SNEL of DRC and ENE from Angola set up an office in Botswana to oversee this project, but three years ago it was decided that the power from Inga 3 would be utilised by DRC. What they have said is that they are going to develop the Grand Inga project. It will have the capacity to generate 40, 000 MW and the DRC has invited every country to give its energy requirements so that those can be included in their feasibility study. Probably this year, there will be a conference to discuss the findings of the study. We are looking to benefit from Grand Inga in future.
PF: Which criticism do you think is levelled against ECB that you don’t deserve?
SS: There are several criticisms that have been levelled against ECB. Some people say the truth is that NamPower is the one which makes a proposal for a tariff to be approved by the ECB. What the ECB does is look at what impact will such a tariff have on the industry itself, and on the major economic activities of the country. We look at what impact that tariff has on the consumer. We look at what impact that tariff has on NamPower itself and of course we consult with the Government to see whether our proposals for approving a certain figure had government approval. Even though the Government has created an independent regulator that regulator is still answerable to the Government and the fact that we consult with the latter does not mean that it has taken away the status of ECB being an independent regulator. So it is not true that NamPower dictates to us what we give them.
People come to us and say ECB created ‘REDs’. There are six goals that are stated to be achieved in the ‘White Paper’. Some of them which are; firstly, there should be proper governance of the energy sector. Secondly, the energy supply to Namibia is maintained etc. The Government thought in order for us to achieve those goals, we have to create a regulator and that is how ECB came into being. In addition to that, in 2000 Cabinet approved a submission that came from the Ministry of Mines and Energy that made a proposal that REDs be created. The Ministry of Mines and Energy outsourced the project to the ECB to work with the industry to create REDs. ECB was simply an advisor. We never instructed anyone to create the REDs. No! The REDs were created by the people themselves after the Government decided to restructure the industry.
We are also accused of raising tariffs without paying consideration to the fact that there are poor people in this country. There is a perception that the increase in tariffs is a result of the creation of the REDs. This is wrong. The restructuring of the industry was based on the fact that the tariffs at that time were too low to cover the costs of supply and as a result of the low tariffs, by 2007, when the southern region started experiencing supply problems, no one could come from outside to invest their money in new generation. For over 20 years, there has never been the construction of a new power plant for electricity here because of the low tariffs.
PF: Where will be ECB in the year of our projected industrialization, 2030?
SS: Well, I am looking forward really to a situation whereby the restructuring of the energy sector would have reached the objectives of Vision 2030. We are looking at a situation where more than 90% of the population would have been connected to electricity and they would have reached a level of consuming power that can be regarded as synonymous with consumption in advanced countries. We are really looking forward to a situation where by the majority of Namibians, more than 90%, would have been connected to electricity. ECB has to serve this major responsibility and that is the protection of the consumers. If the people who are using electricity are being prejudiced somewhere, let the ECB know so that mechanisms can be put in place to correct the situation. In the same manner we protect the consumer ECB protects NamPower and the investor who comes to invest in the country