By: Justicia Shipena
The Namibian government will receive €12 million (N$252 million) for land leased by Hyphen Hydrogen in the Tsau // Khaeb National Park for the green hydrogen project, Finance Minister Ipumbu Shiimi has said.
Shiimi was clarifying issues about the government’s funding for the project during the signing of the Feasibility and Implementation Agreement (FIA) with Hyphen Hydrogen Energy last Friday at State House.
Hyphen is the preferred bidder for the development of a EUR 9.1billion (N$184 billion) green hydrogen project in Namibia.
Shiimi stated the government will be compensated for the two pieces of land leased by Hyphen during the feasibility study process.
“Government, in terms of this agreement, is going to receive money for the lease, because during this study they are leasing two pieces of land in the park for which around 12 million euros will be paid by hyphen during the feasibility study,” he said.
The Minister said, following the feasibility assessment, the government will have to determine the rates Hyphen will pay for the leased land.
He dismissed the notion that the government is subsidising the green hydrogen initiative as incorrect, adding that the project is led by the private sector.
Shiimi pointed out that Hyphen will immediately begin the feasibility study, and that the money that will be utilised during the study would be funded by Hyphen.
“Once the feasibility study is found to be viable, again Hyphen has to look at its own resources and also compliment that resource with money they probably will borrow from somewhere,” he said.
The green hydrogen complex, which will be developed in stages within the Tsau //Khaeb National Park, would initially include the addition of 5GW to 6GW of renewable energy capacity to power three GW of electrolysers. The plant is scheduled to open by the end of 2027 and produce one million tonnes of green ammonia per year, with the capacity being quadrupled by 2029.
“So, it is going to be funded by the private sector. It is not going to be funded by the government. Government is not going to pay, it is going to receive money,” he further clarified.
Shiimi went on to say that the government can only pay money if it decides to buy equity in the project, and that once that decision is made, the government would have to find the money.
According to the agreement, during the construction and operational phases, the project aims for 30% local sourcing of goods, services and materials.
The project will provide significant cash for the Namibian government through land rentals, royalties on all project earnings, and taxes.
At the same time, the government has the option to become a co-investor in the project, with the right to take up to a 24% equity stake at cost.
Furthermore, Shiimi noted that the government may only compensate a developer for the cost or money spent on the feasibility study if the government fails to do specific things.
“For instance if they are not able to have access to the park, that is something within the control of government and the feasibility cannot be done because of that, government will have to refund the developer for the money they have spent on the feasibility study. This is something that has been properly negotiated and is a risk that has been properly mitigated and we believe both partners are working to make sure that this project is a success.”
Namibia aims to produce about 300,000 tonnes of green hydrogen per year for regional and global markets with this project.
At the back of it, Hyphen inked a memorandum of understanding in February this year with South Korean hydrogen producer Approtium and another large chemical business for its 1 million mt/year green ammonia plant development in Namibia.
