Background Report on Namibia’s Power Sector: Utility Performance & Loss Reduction

The country has achieved high urban electrification rates, estimated at around 98%, but the present grid network reaches a far smaller percentage of the rural population, estimated at around 30-40%. The urban population has grown annually at between 4-5% over the past few decades, while rural populations have only grown at between 1-2% per year in most areas. The Namibian economy grew at around 5% per year between 2010 and 2013, with the energy-intensive mining sector being a significant contributor. However, the country is reliant on South Africa for nearly 60% of its electricity, with electricity demand growing at a compound annual growth rate of approximately 6% per year between 2002 and 2011. The vast majority of demand is accounted for by the cities, where the largest portion of citizens with access to electricity live. The Ministry of Mines & Energy (MME) regulates minerals and energy resources, as well as manages mining, petroleum, and geothermal industries. The MME is responsible for collecting royalties and ensuring that safety, health, and environmental standards are consistent with relevant State and Commonwealth legislation, regulations, and policies. The Energy Directorate within the MME is responsible for enforcing the White Paper on Energy Policy of 1998, which aims to achieve security of energy supply, social betterment, effective governance, investment, and growth. The Electricity Control Board (ECB) is a legal regulatory authority established through the creation of the Electricity Act of 2000, which was replaced by the Electricity Act of 2007. The ECB is responsible for regulating the electricity supply industry, including electricity generation, transmission, distribution, supply, and import and export, through setting tariffs and issuance of licenses. NamPower is the state-owned and vertically integrated electricity generator, trader, and transmission entity, owning and operating the majority of all Namibia's transmission and generation assets, as well as some distribution facilities. The generation and trading of electricity in Namibia are fully managed by NamPower, as the single buyer. All independent power producers (IPP) that would like to sell electricity into the grid have to do so through NamPower under a power purchase agreement (PPA). The Electricity Act of 2007 expanded the ECB's regulatory mandate and core responsibilities, including the regulation of the electricity supply industry and the issuance of licenses to electricity generators, traders, and distributors. Namibia's power sector faces significant challenges, including high technical and non-technical losses, which have been identified as a major constraint to the sector's growth and development. The country has implemented various loss reduction programs, including the Erongo RED, CENORED, and the City of Windhoek programs, which have shown some success in reducing losses and improving efficiency. However, further efforts are needed to address the underlying causes of losses and to improve the overall performance of the power sector.