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Cabinet to decide on Kudu package

Mon, 2 March 2015 17:02
by Charmaine Ngatjiheue
Business

Cabinet will soon decide on whether to grant the Kudu Project a financial support package in the next few months, The Villager understands.
Minister of Finance Saara Kuugongelwa Amadhila confirmed to The Villager that a cabinet submission was done and she is still waiting for feedback and advice from the cabinet on the way forward.
“Cabinet is still to take a decision on the support to kudu and the form of support.  The announcement will be made in three comprehensive ways as Kudu is a big project.  I try to look at kudu as one project and not look at it in parts such as the part of MoF, NamPower and namcor or the MME. It is a national project thus the response from Cabinet will be comprehensive. I do not want to answer from one aspect as many components are involved. Let us be patient until that response is made through the normal channels,” Kuugongelwa Amadhila said.
Meanwhile Katali told The Villager that although NamPower completed their research on the financial needs for the downstream package cabinet is still to deliberate on the issue.
 “This request is with the Ministry of Finance for finalisation and once they are finished with it, they will table it Cabinet for approval. I do not know how much the government support package is but once the Ministry of finance tables it to Cabinet, we will all find out,” said Katali.
Last year The Villager reported that Government was yet to release the guarantee needed in the Kudu Gas project because both the National Petroleum Corporation of Namibia (Namcor) and Namibia Power Corp (Nampower) did not submit all the required information needed for such a decision to be made by the Minister of Finance, Saara Kuugongelwa-Amadhila
The project for NamPower alone is estimated to cost about US$ 1.2 billion (N$12.6 billion) as it owns 51% of the project.
Meanwhile, the construction of the project is expected to commence in the first quarter of 2015, while the implementation and commissioning was scheduled for the end of 2017 or latest in the first quarter of 2018. The Kudu gas power project is set to increase power production in Namibia.
Earlier, Government announced that it will avail N$4.3 billion to fund the 44 per cent share owned by Namcor in the project.
The main elements of the project are the development of the Kudu gas field and the construction of an 800 megawatt (MW) combined cycle natural gas-fired power station near Oranjemund and when completed, this power station will feed the Namibian, Zambian and South African power grids.
NamPower’s Managing Director, Paulinus Shilamba, confirmed that the down-stream work has been done and the outstanding decision is to get government approval in terms of how much government will give it (NamPower) for the project to commence.
Shilamba noted that the export agreement issues cannot and have not been ironed out until government notifies them on how much support they will get from government for the project as government is their main shareholder, adding that this request is the responsibility of the MME and the MoF.
He added that they have had many commercial agreements between Kudu power and upstream parties, and that Kudu power and NamPower signed a Power purchase agreement whereby NamPower will be buying the 800MW power from Kudu Power when the Kudu gas station is up and running.
“Government will need to tell us what type of support package they are willing to give us; we are just waiting for the Minister to come back to us to enable the project to proceed. In terms of the procurement package, the Engineering Project Management (EPC) turnkey tender has been won by Shanghai Electric in partnership with Siemens, which is the preferred bidder,” said Shilamba.
Shilamba added that the mandated lead arranger is Standard Bank, which is the preferred bidder despite the agreement not having been signed.
The operational and maintenance contractor agreements are on-going and by June this year NamPower would like to reach a Foreign Direct Investment clause.
“The financial clause will be concluded by September this year and then we will start with the implementation of the project,” said Shilamba.
Shilamba reiterated that the Kudu gas power station is meant to be the Base Load, whereas the peaking power station for Namibia will be the 250MW-power plant.
Shilamba further noted that the Van Eck power station used to be the peaking power station but this, in turn, destroyed it, which he reasoned, forced NamPower to spend N$380 million to rehabilitate it.
Shilamba said the negotiations for the peaking power station (250MW power plant) are going very well and in two weeks, the Commercial agreements will be concluded.
Shilamba concluded by saying that after everything has been finalised, it will be submitted to the governance structure and after that has been done, it will be submitted to the NamPower Executive committee before submission is made to the government, as the main stakeholder, to make its final approval.
“We have given the Ministry of Mines and Energy an update and outcome. Government is our main shareholder and we are waiting for their support. The Cabinet approval goes through the MME and it is their responsibility to ensure that it has been sent to Cabinet.”