Local Sourcing: Hyphen Estimates 30% Local Procurement In Green Hydrogen Project …As procurement is anticipated to cost N$15 billion annually for four years

By:Justicia Shipena
The government and Hyphen Hydrogen Energy’s just-launched Socio-Economic Development (SED) framework anticipate that 30% of local products and services would be procured during the construction and operating stages of the green hydrogen project in the ||Kharas region.
Hyphen will confirm these projections through rigorous baseline investigations to be completed throughout the feasibility phase, according to the SED, which was launched on Monday in Keetmanshoop.
The SED framework emphasises the unique advantages and possibilities that the project would provide to Namibia, such as job creation, procurement, and skill development.
“The project further estimates 30% local procurement of goods, services, and/or materials during the construction and operational phases,” said Obeth Kandjoze, Chairperson of the Green Hydrogen Council and Director General of the National Planning Commission.
Based on a total project cost of N$200 billion, he estimates that procurement will amount to N$60 billion in products, services, or materials, or N$15 billion each year during the fourth year of construction.
Following comprehensive market research, the government issued the first Green Hydrogen Request for Proposal (RFP) in August 2021.
Kandjoze remarked that the RFP included an assessment criterion that served as the cornerstone for the SED framework.
“From the onset, the government was adamant that a hydrogen economy can only be possible when it is rooted in young people, the local communities, and small to medium businesses. This was clearly evidenced in the tender requirements, which weighed 25% of the total evaluation criteria.”
The government created a National Green Hydrogen Strategy in November 2022, to eliminate unemployment by 2040 by producing up to 600,000 green jobs.
With this SED, Hyphen contends that the project would produce up to 15,000 new employees during the building phase and 3,000 permanent jobs when both phases are completed, to fill 90% of these positions with Namibians, with 20% especially targeted for young people.
According to Kandjoze, this SED would charge land leasing rates of up to N$100 million per year during the feasibility studies, with the first rents expected before the end of this year.
“After FID, annual land rentals increase to N$330 million per year for the duration of the 40-year concession. Additional fiscal contributions include environmental levies, taxes, and profit share should the government exercise its equity option,” Kandjoze said.
Toni Beukes, the Head of Environment, Social and Governance (ESG) at Hyphen Hydrogen Energy, revealed during a recent media gathering that on this framework, Hyphen and the government would commence a three-month national community engagement roadshow in August 2023.
The roadshow, Beukes said, will connect with local communities to unpack the parts of the SED framework and highlight how Namibians may benefit from the initiative.
The SED framework is a component of the Feasibility and Implementation Agreement (FIA) agreed in May of this year.
“In partnership with the central, regional, and local authorities, we aim to co-create solutions with local communities as we develop a road map for the delivery of a comprehensive socio-economic development strategy. It’s our ambition that this project will set a new global benchmark for the sustainable and equitable development of large-scale green hydrogen projects that puts inclusive economics and robust environmental sustainability at its heart,” Beukes expanded.
According to Hyphen, the government will approve the final contractual delivery duties of Hyphen in respect of its socio-economic development commitments in the execution of the project, including appropriate consequences in the case of non-performance, within a stringent governance structure.
Meanwhile, Green Hydrogen Commissioner and Presidential Economic Advisor James Mnyupe emphasised the tremendous socio-economic progress and development that green hydrogen may offer Namibia.
Mnyup went on to say the hydrogen projects will serve as the foundation for the construction of thousands of houses, new roads, port facilities, electricity transmission lines, pipelines, desalination plants, and hospitals, among other critical infrastructure, all while utilising existing Namibian skill sets and service providers.
He also stated that multi-billion dollar contracts might allow local SMEs to establish generational riches and sustainable enterprises.
“This is given that some of the green hydrogen projects being contemplated in Namibia are seeking to explore unlimited renewable energy for multiple decades,” he said.
Namibia intends to build an at-scale green fuels sector with a production target of 10–12 Mtpa hydrogen equivalent by 2050, which it argues may potentially alleviate Africa’s energy poverty.
Namibia is developing three hydrogen valleys in the southern region of ||Kharas, the central region, which includes the port of Walvis Bay, and the northern region of Kunene.