Namibia’s electricity sector could be the toast of investors with increasing demand for power in the country presenting substantial and lucrative investment opportunities for the international and domestic investor, analysts said.
An analysis of the potential of Namibia’s electricity generation sector’s capacity to attract investment by a global consultancy and research firm, Frost & Sullivan, said that the local electricity generation sector was currently worth US$1.3 billion, and would rise to US$2 billion by 2014.
Frost & Sullivan said Wednesday that the Namibian market was ripe for investment in generation, transmission and distribution, adding that these sectors would improve the capacity and efficiency of the power sector in meeting current and future demand.
Electricity-starved Namibia requires about 550 MW of electricity at peak demand, with more than half of the country’s electricity requirements coming from neighbouring South Africa, Zambia and lately Zimbabwe.
“The Namibian electricity industry will experience growth over the next few years. Power sector reforms have attracted sizeable investments from the Namibian government, even as support from various international financial institutions for the country’s electricity industry is imminent,” said research analyst Moses Duma.
Frost & Sullivan said that Nampower, the country’s power company, had embarked on a rural electrification programme aimed at ensuring countrywide coverage.
At the same time, Nampower is increasing its transmission capacity and is poised to boost generation capacity through the construction of several power plants.
However the growth of the Namibian electricity industry is seriously hampered by shortage of capital.
Frost & Sullivan noted that due to a heavy reliance on hydro-power generation capacity and imports from South Africa, Namibia faced a challenging time during droughts and at peak consumption periods.
The Ruacana power plant, Namibia’s sole hydro power generation plant, is affected by seasonal factors in the dry season when the Kunene River runs dry.
On the other hand, Eskom, which used to supply close to 80 percent of regional electricity requirements, is also faced with its own local challenges, which has caused inconsistent power supplies.
“Nampower has decided to increase its hydro generating capacity as this is the cheaper option. There are also prospects of wind, solar and gas power generation,” Duma said.