The Governor of the Bank of Namibia (BoN) Johannes !Gawaxab has urged government to develop an energy transition timeline that will boost investor confidence in the country.
This follows Mines and Energy Minister Tom Alweendo’s statements on the energy transition, in which he stated in November 2022 that forcing Africa to move forward with an energy transition on any timeframe other than its own disrespects African objectives.
Despite global commitments to reduce reliance on fossil fuels to address climate change, Alweendo insisted that the timetable for Africa’s energy transition be crafted by Africans themselves to ensure a just energy transition that does not jeopardise economic development on the continent.
“The government should develop a clear energy transition timeline that will boost investor confidence in the country,” !Gawaxabsaid.
He stated that as a small country facing difficulties like inequality, poverty, and unemployment, Namibia is fully within its rights to take advantage of all available resources.
However, as the globe moves towards decarbonisation, the country must design an energy transition timeline, and regional infrastructure development should be prioritised on the development agenda, the Governor said.
He emphasised the importance of maximising local value production and industrialisation, while stating that the Mine and Energy Ministry’s proposed local content policy should aim to maximise the advantages to Namibian people.
The government has prioritised local content in energy sector improvements, recognising the need of capacity building and skills transfer in ensuring that large-scale energy projects result in concrete advantages for Namibians.
The Mines and Energy Ministry announced in March that it was working on finalising a local participation policy for the country’s burgeoning oil sector.
The National Upstream Petroleum Local Content Policy aspires to build a globally competitive petroleum sector that maximises benefits to the country via meaningful and long-term participation by Namibians and local businesses across the value chain.
Furthermore, the policy seeks to move Namibia beyond relying solely on taxes and royalties, in order to gain more value from backwards, sideways, and forward linkages, as well as to ensure the transfer of technology, knowledge, and skills, and to promote Namibian ownership and financing at all levels of the sector.
Concerns have been raised that foreign investors dominate the oil and gas sector, which has become a cash cow for a few lucky locals who sell their exploration rights to international investors.
The Governor stressed the local content policy should maximise the benefits by improving and developing strategies that will target Namibian labour, goods and services, firms, ownership, and financing along the value chain.
He went on to say that the government’s local content policy should try to address and establish a clear legislative framework for local content standards, and that local engagement efforts should be clear and simple.
“It should also provide a clear regulatory framework to identify specific sectors for the development of local capacity, maximise the employment and development of Namibians, maximise the participation of local supplies along the value chain, encourage the transfer of technical knowledge and skills and promote Namibian ownership and financing at all levels of the sector.”
According to !Gawaxab, under the investment-related recommendations, targeted incentive packages to decrease the investment risks encountered by early adopters in the oil and gas sector and related activities will be necessary, and this may be expanded to their sectors of strategic importance.
“This could include a mix of financial incentives, fast-tracking access to land, assistance in meeting or exceeding legal regulatory provisions, utility connections and related matters of immediate relevance to lower the bearers of targeted investments,” !Gawaxabsaid.
He said there is a need for Namibia to manage the petroleum revenue.
“If we get to that stage through assurance of accountability and transparency the Ministry of Finance and the revenue authorities must ensure the collection of due revenues and avoid linkages,” he said.
!Gawaxab said under the environmental and climate recommendations, Namibia will need to ensure that it maintains a high standard of health and safety.
He insisted the government protect the environment.
“While production can have a significant impact on the environment and as such it will be crucial to implement measures that mitigate these impacts this will especially be true in the Kharas region where efforts will need to be made to control emissions, chemistry waste, and the prudent handling of waste water.”
To this end, Namibia will develop three hydrogen valleys in the southern region of Kharas, the central region, encompassing the port of Walvis Bay, and the northern region of Kunene.
Mines and Energy Minister Alweendo previously said that Namibia will exploit oil and gas resources parallel to its green hydrogen projects.