- Introduction / General information
- Present ESI Structure
- ESI deficiencies
- ESI policy goals and restructuring objectives
- Main conclusions of the ESI Restructuring Study
- Policy on private sector participation in ESI
- Electricity Sector Governance :
Previous Legal dispensation
- ECB - Policy framework
- ECB - Legal framework
- ECB – Areas of regulation
- Main functions of the ECB
- Setting up of the Licensing System
- Licensing conditions
- Lessons from the Transitional licensing proces
- ECB participation in ESI restructuring
- The way forward
1. Introduction / General information
- Est. Pop. 1.8mill. (70% Rural, 30% urban) growing @ 2.6%
- GDP US$2.8bill. growing @ 2.8%(average last 10 years)
- Max Demand 350 MW
- Electricity Consumption 2,277 GigawattHours growing @ 2.9%(average last 5 years)
- Access to electricity:
- 1991: Urban 69%, Rural 5%, Overall 24%
- 2002(est): Urban 80%, Rural 15, Overall 40%
2. Present ESI Structure
3. ESI deficiencies
- Fragmentation (too many players)
- Lack of uniform tariff structure
- Insufficient customer focus
- Lack of human & financial resources
- Diverse performance standards
- Insufficient national & regional electrification planning
- Low electricity accessibility ratio
4. ESI Policy Goals and Restructuring Objectives
- increase efficiency
- improve access to electricity
- increase security of supply
- promote investment & growth
- ensure sustainability
- alleviate resource constraints
- appropriate governance
5. Conclusions of ESI Restructuring study
5.1 ESI Market Structure
Single Buyer (SB) model in the medium term and retail competition in the long term.
Key elements of SB model:
- Generators sell to the SB & export via the national transmission system
- All distributors & eligible large users buy from SB
- Eligible large users can choose between SB and local distributor
- ECB may waive the SB’s right to supply in favour of IPP/imports
- Embedded generation (in licensed area) need not sell to the SB
- SB to be housed in Nampower – ringfenced and “independent”
- Transparent third party access monitored by ECB
Distribution Industry Structure
- Establishment of Regional Electricity Distributors (RED’s)
- Four RED’s identified :
- Northern, Coastal, Central & Southern Namibia
- Each RED unique in terms of geographical area, customer base, and network charrasteristic
Regional & LA issues
- Amendment of R & L Authority Act to enable participation in REDs
- All MRLGH electricity assets to be donated to R & Local Authorities
- GRN and donor funded rural electrification assets owned by NamPower to be donated to the Regional Councils
- Local Authorities to be given the right to tax electricity supplied to customers in their areas of jurisdiction
- Local & Regional Authorities to be given powers to:
- Enter into joint ventures
- Transfer fixed assets to new distribution companies
- Transfer staff to new distribution companies
Policy on private sector participation in ESI
- “GRN will encourage and promote the participation of black Namibians in all aspects of the ESI, including ownership structures of generation and supply”
- Present ESI dominated by public sector - to change
- Private sector participation through capital investment and transfer of skills
- Areas for involvement
- New power generation (IPPs)
- New distribution companies and RED’s
- Management and service contracts
7. Electricity Sector Governance: Previous legal dispensation
- RSA Electric Power Proclamation of 1922 and Amendment Ordinance of 1961
- No licensing system
- Projects and standards approved by Minister (ad-hoc)
- No common, national standards & tariff system
- NamPower tariffs approved by the Minister of MME under the Performance Agreement framework
- Municipality tariffs approved & gazetted by the Minister of MRLGH on ad-hoc basis
8. ECB – Policy framework
- “Government will implement a modern and appropriate legal and regulatory framework for the electricity sector through the Electricity Act and associated regulations, and the creation and resourcing of a competent Electricity Board to regulate the sector’s operations”
- “Government will ensure that adequate protection of electricity end-users and licencees is established through the creation and resourcing of the Electricity Board to be established under the Electricity Act”
- “Government will ensure that licenses for distribution of electricity in urban areas under the Electricity Act include provisions, such as electrification targets & a fair tariff structure, that facilitate increased access to electricity among low-income consumers”
- “In the forthcoming tariff study, connection fee policies, as well as the merits of a special social tariff to cover basic electricity needs, should also be evaluated.”
9. ECB – Legal framework
- The Electricity Act of 2000 (Act 2 of 2000)
- Regulations
- Administrative Regulations (gazetted in 2000)
- Technical Regulations (in final draft form)
- Economic Regulations (in final draft form)
- Licenses
10. ECB - Areas of regulation
- Prices and tariffs
- Standard of service & quality of supply
- Environmental, health & safety measures
- Social & national objectives (e.g. rural electrification, energy conservation, regional co-operation)
11. Main functions of the ECB
- Licensing
- Pricing/tariffs
- Setting technical & performance standards
- Mediation for dispute resolutions
- Consumer protection
- Competition & efficiency enforcement
- Health, safety & environment measures
- Inspection & compliance monitoring
- ESI development planning
12. Setting up of the Licensing System
- Extensive promotion & public awareness (presentations, press statements, seminars)
- Design of licence application forms & licence conditions
- Licence application evaluation & issue of licenses
- National tariff study (completed, implementation phase)
- Assistance to ESI (municipalities) regarding ringfencing
- Technical & Economic Regulations (under preparation)
- Amendment of Electricity Act (in progress)
- Mechanism to enforce licence conditions(under preparation)
- Single Buyer market and Grid code study (under way)
13. Licensing conditions
- Duration
- Generation (expected future life)
- Transmission (25 years)
- Distribution/supply (1-4 years)
- Common licensing conditions (general)
- Tariffs (only those approved by ECB)
- Provision of information/reporting
- Separate accounts for electricity operations (ring-fencing)
- ECB right to inspection
- Decommissioning, health, safety, environment
- Technical standards, quality of supply and service
- License area
- Common licensing conditions (distribution)
- Non-discriminatory access to the network
- Supply contracts with consumers
- No termination of supply without prior notice
- Obligation to negotiate with private sector to form RED’s
- Compilation of asset registers
- Carry out electrification projects
- Reduce distribution losses
- Applying new billing systems
- Report incidents affecting customers for more than 6 hours
14. Lessons from the Transitional licensing proces
- Unprepared ESI (deadlines had to be set to get applications)
- Non-ring fenced ESI (difficult to regulate)
- Most applicants did not fully complete the application forms
- Need for assistance to most distributors to meet licensing conditions
- Very high distribution losses
- Discrepancies in existing tariffs
- Need for amendment of laws & licensing conditions in future
15. ECB participation in ESI restructuring
- ECB to continue involvement in ESI restructuring through licensing system
- Licensing and licence conditions an important tool for restructuring & market development
- Only MME&ECB non-commercial players)
- ECB experience (from MME) important for successful ESI restructuring
- ECB member in all regional ESI restructuring working groups
16. The way forward
- Completion of Economic & Technical Regulations, as well as amendment of the Electricity Act ( 2002 )
- Implementation of national tariff study (2002/2003)
- Completion of Single Buyer market study & creation of Single Buyer market structure ( end 2002 )
- Completion of grid code ( end 2002 )
- Creation of REDs ( 2003/05)
- Issue of long-term distribution licenses ( to REDs)
- Setting up of quality of supply & service standards ( 2003)
- Transformation to wholesale & retail market stucture (2011)
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