Erongo RED launches five-year strategy

ERONGO Regional Electricity Distributor (Erongo RED) launched a new five-year strategic plan last Thursday.

The plan came into effect on 1 July, and will run until June 2023.

Erongo RED board chairperson Zoe Nambahu said the company experienced an average growth of 4,2% during the last five-years. During this time, revenue exceeded N$1 billion for the first time since the company was established in 2005.

Erongo RED spent over N$32 million in electrifying close to 1 200 rural houses, and another N$16 million for the electrification of nearly 1 300 peri-urban houses. The bulk of development went to the upgrade of the Walvis Bay and Swakopmund networks, which took up N$570 million and N$194 million, respectively.

As for the next five years, Erongo RED will be focussing on financial sustainability, stakeholder focus and collaboration, and organisational excellence.

Besides this, market changes to the electricity supply industry, which is introducing competition in the market, and the emergence of disruptive technologies (customers sourcing electricity from renewable resources such as solar), are also aspects which Erongo RED will adapt to, said Nambahu at the official launch of the strategic plan at Swakopmund.

She added that Namibia’s model for electricity supply is undergoing change, with the objective to create a more open-market situation in which buyers and sellers will be able to interact more freely. This model introduces competition in the market, and will see the second phase also introduce choices for large distribution customers.

Specific mention was made about the recently approved modified single buyer model (MSB) which will allow first transmission electricity consumers and independent power producers to transact with each other directly in the supply of electricity.

Transmission customers are now able to buy up to 30% of their energy requirements directly from a private generator. The second phase allows for distribution customers with larger than 1mW capacity to also become contestable customers.

According to Nambahu, the MSB can either provide new opportunities or threats for the company.

Furthermore, she said consumer behaviour and expectations have changed as the number of options for obtaining power have increased. Customers are, therefore, not only consumers, but also becoming generators of their own electricity for own consumption. This can be seen in the spike of household solar-electricity production.

“Therefore, the importance of customer retention strategies for the electricity supply industry’s stakeholders has become a key strategic consideration. This is because consumers have the possibility to pursue alternatives, among them becoming self-generating,” she stated. Deputy minister of mines and energy Kornelia Shilunga launched the new plan, and said it is in line with national development plans when it comes to affordable electricity provision.

“Access to electricity remains a challenge, and requires commitment and prioritisation by the distributors to reach the goals. I am well-aware of the pressure from consumers demanding lower electricity tariffs, while the generation, transmission and distribution costs are ever-increasing,” she noted.

Shilunga said the government is also considering several generation projects to avoid overreliance on electricity imports, as well as encouraging independent power producers to come on board to diversify the energy mix, and at the same time encourage competition.

“By doing this, we can increase our local generation and stabilise the electricity prices for the benefit of our business and residential customers,” she continued.