Xaris secretly pushed through backdoor

DESPITE unresolved concerns over high costs, economic viability, the spectre of political influence and an ongoing court case, some government officials are quietly pushing for the construction of the Xaris power station at Walvis Bay.

The lobbying for the power station is contained in a confidential statement from Xaris co-owners Boni Paulino and Hennie Steyn to numerous ministers and potential financiers and partners.

Swapo Party secretary general Nangolo Mbumba and his family are also shareholders.

The Xaris project, also known as the Walvis Bay Power Plant, which will generate 250MW, is estimated to cost N$5 billion.

Several government officials have branded Xaris, which its shareholders want to link to the N$5,5 billion national fuel storage facility under construction at the harbour town, as unrealistic.

Internal memos dated 24 March 2017, 26 April 2017 and 30 May 2017 show that a steering committee was formed under the energy ministry to push for the construction of the gas-to-power plant.

The memo dated 24 March states that the steering committee – chaired by the energy ministry’s permanent secretary Simeon Negumbo – first met on 16 March 2017. NamPower, Namcor, Namport and Xaris Energy are also represented on the committee.

Government sources said the bosses of Namport and Namcor do not attend the meetings but delegate managers, a sign that they have reservations about the project.

The memo also states that Negumbo explained at the first meeting that the Xaris project was supported by the state, and that “all the other committee members expressed their full commitment to the project, and confirmed the allocation of resources to have the necessary work completed timelessly [sic]”.

The memo dated 24 March furthermore states that Xaris complained to the committee about the project’s slow implementation, while the one dated 26 April says Xaris was impressed that the committee was empowered to guide the project up to the completion of the financing stage, when the preferred bidder must have everything in place and be ready to commence construction of the power plant.

Government sources, however, said political pressure appears to be driving the project, despite reservations from senior state officials.

The Namibian reported last year that mines minister Obeth Kandjoze requested Cabinet to completely scrap the Xaris project in 2015 because he said it was not economically viable.

At the time, sources said President Hage Geingob and Prime Minister Saara Kuugongelwa-Amadhila allegedly used their political clout to ensure that Xaris went ahead.

One year later, it’s becoming clear that politicians are still pushing for the Xaris project to get off the ground. Sources said the Xaris steering committee was formed as a result of political pressure.

Despite initially calling for the scrapping of the project, Kandjoze allowed the creation of the steering committee. It is unclear if he now supports the project, or whether he is playing along for political survival.

Kandjoze told The Namibian yesterday that he has not publicly announced his stance on the viability of the Xaris project, except that his December 2015 statement on the power project remains.

“As minister of mines and energy, I am yet to see the commercial analysis by NamPower to enable me to make a judgement,” he said.

It’s unclear why Kandjoze agreed to an implementation committee while the ministry does not know whether the project is viable or not.

He said the steering committee is an internal administrative arrangement aimed at ensuring full implementation of the project.

“The obligation to assess the commercial viability of the project is with NamPower,” Kandjoze said, adding that Cabinet approved the project on the basis that the state would not be financially exposed.

NamPower will acquire a 30% stake in the Xaris project, raising fears that taxpayers’ money would eventually be used to fund the project.

Asked whether the state could afford the project, Kandjoze said “costs are expected to be recovered via tariffs which are approved in accordance with the act by the Electricity Control Board”.

The Namibian understands that Arandis Power, the other company that bid for an energy project, went to the Supreme Court after losing a High Court case on this contract.

Geingob has over the years warned officials not to undermine the role of courts, yet the energy ministry is busy implementing a project that is being disputed at the highest court in the land.

Kandjoze claimed that he was not aware of an ongoing court case. “The court case, to my recollection, concluded last year,” he said.

Sources said Arandis Power informed the NamPower board last week that they should not decide the Xaris contract because it was being reviewed in the Supreme Court. The NamPower board met yesterday.

The sources also said Xaris might want to demand the money they have already invested in the project.

Xaris claims on its website to have already invested close to N$400 million in the project, a figure disputed by some experts, who say the amount looks inflated.