Erongo RED stakeholders strategise

STAKEHOLDERS of the Erongo Regional Electricity Distributor (Erongo RED) are holding a three-day summit at Swakopmund to devise strategies for the company’s relevance and sustainability.

The summit, which started yesterday, will highlight key strategic and policy matters about the company, addressing Erongo RED’s strategic plan to be launched tomorrow, its performance during trying economic times, renewable energy, and how the recent Cabinet-approved modified single buyer model (MSB) will affect its business.

Erongo RED board chairperson Zoe Nambahu said despite slow economic activity in Namibia over the last two years, the distributor has managed to achieve a “healthy financial position”.

Namibia’s economy is experiencing subdued growth, with domestic economic growth contracting to 1,7% in 2019. This is largely due to contractions in major sectors such as mining, agriculture and trade. The prolonged drought also has an impact on the economy.

“As a company, we have also been affected by the slow economic activity. There has been a decline in consumption by some businesses and residential customers. This is mainly due to some businesses closing down due to mines going on care and maintenance and some consumers losing their jobs,” said Nambahu at the opening of the summit, reminding attendees that despite these challenges, the company did not increase its tariff for this financial year.

She further pointed out that the MSB, which was implemented last month, has also brought another change to the electricity industry, and may also affect business for Erongo RED.

The main change to the model is that the MSB will allow first transmission electricity consumers and independent power producers to transact with each other directly in the supply of electricity.

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

“The MSB can either provide new opportunities or threats for the company,” Nambahu said.

“It is very crucial at this point for shareholders to ensure Erongo RED is geared for these changes. For the last six months, the company has been working hard in crafting the new strategic plan to ensure Erongo RED is geared for new changes in the industry.”

Erongo governor Cleophas Mutjavikua urged Erongo RED to take advantage of the MSB to source and negotiate cheaper electricity from independent power producers and to pass on the benefit of lower tariffs to consumers.