Mr. Markus von Jeney
Commercial energy purchases account for at least 15% of GDP, while the economy’s energy intensity has risen by 25% in the period 1991 to 1996, from N$3.4 million in 1991 to N$4.3 million in 1996 based on the 1990 GDP prices, which is seen by economic experts as a normal trend for developing countries.
The expanding vehicle fleet and constantly growing transportation activities for goods as well as passengers resulted in a strong growth in the consumption of diesel and petrol. In the period 1990 to 2000, diesel consumption has more than doubled and petrol consumption has increased by more than 50%.
Since our independence in 1990 the share of transport fuels in total commercial energy consumption has been rising (it was 55% in 1995 as shown in Figure 1) and overall liquid fuels consumption accounts for 63% of total commercial energy consumption (see Figure 2).
Most energy needs in Namibia are well catered for, the demand however, is increasing steadily and serious efforts must be undertaken to ensure future energy provision, particularly in the electricity field and diesel fuel for the transport sector.
The country has to rely on all its petroleum fuels from imports from regional as well as from international markets.
Regarding the sourcing of electricity, Namibia can generate about 50% of her supply through own generation, but new electricity generating plants (such as 800 MW Kudu Gas combined cycle thermal plant, 400 MW Epupa hydropower, 25 MW diesel plant at Walvis Bay and even nuclear power projects) are presently planned to alleviate this position from escalating.
The demand for energy in the world is growing at a steady pace and will keep on putting pressure on fuel prices as demand grows. Markets have adopted a transfer from diesel driven generators to conventional energy and more user friendly energy, such as electricity (although also partly generated from unsustainable sources).
The Ministry of Mines and Energy has statistics that show that Namibia is the SADC state with the highest per capita consumption of petroleum products, mainly because of low population densities and long transportation routes. This implies that the country will be severely affected by any fuel price increases, irrespective of whether these are as a result of worldwide market forces or international/regional changes.
Namibia’s main supply for petroleum fuel originates from refineries in South Africa which are getting very close to their peak design capacity and will soon not be able to supply all of their customers. New refinery capacity is already in the pipeline. Therefore, market forces will be influenced and the already elevated fuel prices will be driven to even higher levels.
The scenario of an own oil refinery in Namibia could only be for the export market, as the home market of about 15 000 barrels a day will not sustain an own oil refinery. As for the electricity supply Namibia is reliant on the South African power plants, which are mainly old coal fired plants and will not be able to generate adequate electricity for the present developments in the region.
A shortfall was already felt by load shedding in South Africa but not yet in Namibia, but these shortfalls can become critical in the near future. In the electricity sector, the tariffs presently charged in Namibia are not fully cost recovering and therefore are seen as being too low compared to international tariffs.
The replacement costs, which are presently not fully recovered, have to be allocated and paid by the consumer but would increase these tariffs quite substantially. These costs are introduced by NamPower by increasing the rate to be fully cost reflective by 2010. The planning backlog for new power generating plants has brought Namibia in this position which will only improve if funds are generated to do so.
Namibia has a small manufacturing sector, contributing an annual average of 0.8 % to the total electricity consumption. The main energy consumers are the mining smelters, the fishing factories, the breweries and the various meat markets and abattoirs. These manufacturers all need a lot of energy for their business at affordable cost.
Namibian oil companies are not competing on fuel price level, as the prices of petrol and diesel are regulated by government. Therefore, the oil companies have oversupplied the retail sector in fuel outlets and they will rather cut their retail sector to become more competitive once the deregulation of prices takes place, than to invest more for the expansion thereof.
The need to get higher returns has always superseded the need for environmental protection. To alleviate this need government must make the necessary statutory framework to implement the necessary protective measures, such as the Petroleum Products Regulations, 2000.
Furthermore, it requires the establishment of a forum which will enable government to fully police such scenarios. Investments in the infrastructure of the electricity sector will become a necessity once the demand supersedes the supply and a shortfall of electricity generation in the neighbouring South Africa will soon be of detrimental effect here in Namibia. Projects in the electricity generation will have to get top priority to ensure that the developments in the mining sector will take hold.
Average annual growth has decreased by 0.6% in the period 1990 – 2000 due to the closure of mines and increased energy efficiency at the enduser points. This trend has been reversed however, with the development of the Skorpion Zink mine at Rosh Pinah, southern Namibia and the development of about 5 to 11 new uranium mines.
Environmentally driven requirements must get their rightful attention in time to make an indent in the changing environment, as the present supply of hydro-carbons will not last for another century. The difference between national need and global environmental necessities has to be accommodated. It also implies that the modern energy scenario may be taken up positively in the Namibian energy supply scenario, particularly when environmental costs are introduced at an early stage.
New technology in energy supply means much more in the developed than in the developing world and realities have to be seen in that perspective. This implies that the development status of Namibia’s energy supply sector can be altered more readily to adapt to the new millennium’s challenges.
However, the Government of Namibia has committed itself to the promise of change in energy supply as the general renewable energy resources such as solar and wind have not as yet been tapped and bodes well for the general adaptation for vast areas of the country to be supplied by either solar, wind, geothermal, or even tidal/wave energy sources. In conclusion we can say that:
• Namibia imports 100% of all petroleum fuels and 50% of its electricity used in the country from neighbouring states.
• Namibia is at the far end of access to energy and needs to try and develop more own sources (hydro, geothermal, solar and wind) particularly with new sustainable energy technologies, as renewable energy is abundantly available here and to be less dependent on costly energy imports; and
• advantages of long-term renewable energy running costs versus those of conventional energy sources must be fully exploited. Although the development should reach into the new and renewable energy forms it should be advisable to explore own energy resources such as the Kudu gas field or Kunene river hydroelectric power sites within the 2050 time frame to become selfsustainable.
