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Contents

Vision, Mission, Corporate Values...............................................................................................................................................................4


Abbreviations/Acronyms............................................................................................................................................................................6
ECB Board Members.....................................................................................................................................................................................8
ECB Management.........................................................................................................................................................................................9
Chairpersons 2013 Annual Report Contribution.....................................................................................................................................10
Access............................................................................................................................................................................................10
Affordability and end user focus................................................................................................................................................11
Electricity sector performance....................................................................................................................................................11
Security of supply........................................................................................................................................................................11
Strengthening stakeholder engagement modalities...............................................................................................................12
Chief Executive Officers Report................................................................................................................................................................14
Highlights......................................................................................................................................................................................14
Cross Cutting Matters...................................................................................................................................................................16
Legislative Report..........................................................................................................................................................16
Electricity and Energy Regulatory Authority Bills........................................................................................16
Regulatory Instruments..................................................................................................................................17
Competition and Fair Play..............................................................................................................................17
Challenges with Regulation Of Farmer Schemes........................................................................................17
Corporate Governance Compliance............................................................................................................................................18
Public Relations and Stakeholder Management......................................................................................................................18
Corporate Social Responsibility....................................................................................................................................19
Human Resources........................................................................................................................................................................19
Recruitment, Selection and Turnover..........................................................................................................................20
Staff Numbers................................................................................................................................................................20
Staff Turnover.................................................................................................................................................................20
Promotion......................................................................................................................................................................20
Key Challenge Experienced..........................................................................................................................................20
Training and Development...........................................................................................................................................20
Employee Wellness.......................................................................................................................................................21
Information Communication Technology..................................................................................................................................21
Economic Regulation...................................................................................................................................................................22
Tariffs..............................................................................................................................................................................22
Approved tariffs..............................................................................................................................................22
Cost Reflectivity of Tariffs...............................................................................................................................24
Local Authority Surcharge..............................................................................................................................24
Transformation of the Single Buyer to Modified Single Buyer Market Model.........................................24
Economic Regulation Projects......................................................................................................................................25
Technical Regulation....................................................................................................................................................................28
Quality of Supply Profile for the Namibian ESI...........................................................................................................28
Quality of Supply for Local Authorities the Case of Okahandja and Rehoboth....................................................28
Applicable Standards.....................................................................................................................................................28
Dip and Swell Assessment...........................................................................................................................................28
Supply Reliability Assessment.....................................................................................................................................28

Voltage Magnitude........................................................................................................................................................29
Voltage Unbalance........................................................................................................................................................29
Quality of Service Standards........................................................................................................................................29
Customer Complaints....................................................................................................................................................29
Wiremens Licensing in the Namibian ESI...................................................................................................................30
Technical Audit of the ESI.............................................................................................................................................31
Assessment of Power Supply Status to Essential Service Facilities..........................................................................31
Demand Side Management (DSM) Initiatives..........................................................................................................................31
Renewable Energy and Energy Efficiency.................................................................................................................................32
Renewable Energy Procurement Mechanism............................................................................................................33
Addressing the Security of Supply through the NIRP Development......................................................................................33
Overview of the NIRP Process......................................................................................................................................33
Planning Parameters and Criteria................................................................................................................................33
The NIRP Reference Demand Forecast........................................................................................................................34
Technical Regulatory Tools..........................................................................................................................................................34
Technical Rules...............................................................................................................................................................34
Grid Code........................................................................................................................................................................35
Safety Code....................................................................................................................................................................35
Optimised Maintenance Guidelines............................................................................................................................35
Distribution Infrastructure Standards...........................................................................................................................35
Audit Manual.................................................................................................................................................................35
Licensing.......................................................................................................................................................................................37
New Licenses.................................................................................................................................................................37
Amended Licenses..........................................................................................................................................37
Renewed Licenses..........................................................................................................................................37
License Applications under Review..............................................................................................................37
Independent Power Producers (IPPs)...........................................................................................................37
Industry Analysis..........................................................................................................................................................................38
Performance Management in the Electricity Sector..................................................................................................38
Licensing Compliance....................................................................................................................................................38
Customer Complaints....................................................................................................................................................39
Performance of Regional Electricity Distributors........................................................................................................39
Performance of Distributors Outside the RED Areas..................................................................................................40
Performance by Municipal Electricity Distributors.....................................................................................................41
Performance by Village Authority Distributors...........................................................................................................42
Performance by NamPowers Distribution Areas.......................................................................................................42
Performance of Farmer Schemes................................................................................................................................43
Transmission Overview.................................................................................................................................................43
Generation Overview....................................................................................................................................................44
Key ESI Statistics...........................................................................................................................................................................45
Status of Strategic Plan Projects.................................................................................................................................................49
Regional & International Activities............................................................................................................................................49
RERA Activities...............................................................................................................................................................49
African Forum for Utility Regulators (AFUR) Training................................................................................................50
Electricity Markets, Cross Border Trading and Power Pools......................................................................................50
Consumer Participation in Regulation of the Infrastructure Sector..........................................................................50
World Energy Council....................................................................................................................................................50
Annual Financial Statements....................................................................................................................................................................52

Vision, Mission
Statement and Corporate
Values
Vision
To be recognised as a leading regulator for achieving optimum viability and competition in the Namibian energy industry.

Mission Statement
To regulate and control the Namibian ESI in the interest of all stakeholders with regard to price, quality and reliability

Corporate Values
Professionalism
To conduct every task to a standard of excellence and to maintain the highest level of technical competence and personal
integrity / efficiency so as to ensure the satisfaction of all stakeholders.

Integrity
To be accountable and act in accordance with government policy and accept full responsibility of all outcomes; to be transparent.
open, honest and fair in all dealings and communications with stakeholders.

Innovation
To innovate through learning, teamwork and knowledge-sharing in order to remain competitive in the market and continue
to deliver excellent service.

Sustainability
To ensure the endowment of Namibias energy resources are available to present and future generations by considering our
economic, environmental and social responsibility.

Abbreviations /
Acronyms

AFUR.....................African Forum for Utility Regulation

NAMREP...............Namibia Renewable Programme

CBI........................Capacity Building Institute

NEF.......................National Energy Regulation

CEC........................Copper Belt Energy Corporation

NIRP.....................National Integrated Resource Plan

CENORED..............Central Northern Electricity

NESC.....................Namibia Electricity Safety Code

CEO.......................Chief Executive Officer

NGO......................Non-governmental Organisation

CSI.........................Corporate Social Investment

NMC......................Namibia Medical Care

DSM......................Demand Side Management

NORED..................Northern Electricity Distributor

ECB.......................Electricity Control Board

NP.........................NamPower

EDI........................Electricity Distribution Industry

PPA.......................Power Purchase Agreement

ELS........................Commonwealth Special Advisory Services

PV.........................Photovoltaic

Division: Economic and Legal Section

QoS.......................Quality of Supply

EPMS....................Employee Performance System

RE.........................Renewable Energy

ESI.........................Electricity Supply Industry

REDs.....................Regional Electricity Distributors

ETSIP.....................Education and Training Sector

RERA.....................Regional Electricity Regulators ..

Improvement Programme
Fig.........................Figure

.............................Association of Southern Africa


REEEI.....................Renewable Energy and Energy
Efficiency Institute

Gx.........................Generation
HIV........................Human Immunodeficiency Virus

REEEP....................Renewable Energy and Energy


Efficiency Programme

IPP........................Independent Power Producers


KWh......................Kilo Watt Hour

RC.........................Regional Council

LA.........................Local Authority

SADC.....................Southern Africa Development ..

LHPC.....................Lunsemfwa Hydro Power Company

Community

LPU.......................Larger Power Use

SAPP.....................Southern African Power Pool

LRNC.....................Long Run National Cost

SNIED...................Sam Nujoma Innovative Enterprise

MME.....................Ministry of Mines and Energy

Development

MW.......................Mega Watts

Tx..........................Transmission

NAMCOR..............Namibia Petroleum Corporation

TOU.......................Time of Use

NAMPOWER.........Namibia Power Corporation

ZESA.....................Zambian Electricity Supply Agency

ECB Board Members

Standing from left to right:


Mr. Gottlieb Hinda
Member of the Board. Financial and investment expert. Currently the Head of Business Support & Development at the
Development Bank of Namibia.

Mr. Siseho C. Simasiku


Chief Executive Officer, ex officio Member of the Board

Mr. Fritz Jeske


Member of the Board and the Finance & Audit Committee and Chairperson of the Pricing & Tariffs Committee. Electric
Engineer with over 35 years experience. Currently CEO of Bicon Namibia Consulting Engineers

Mr. Gerson Katjimune


Member of the Board and Chairperson the Finance & Audit Committee. Retired Economist. Currently a farmer.

Seated from left to right:


Mr. Jason Nandago
Chairperson & Member of the Human Resources and Remuneration and Pricing and Tariffs Sub Committee. Economist with
20 years experience, currently Managing Director of Metropolitan Namibia (Pty) Ltd

Mrs. Panduleni N. Shimutwikeni


Vice Chairperson of the Board and Chairperson of the Human Resources and Remuneration Sub-Committee. Lawyer, and
currently the Secretary to the National Council of Namibia.

ECB Management

From left to right:


Mr. Francois Robinson: Manager Regulatory Support Services
Mr. Pinehas Mutota: Manager Economic Regulation
Mr. Rojas Manyame: General Manager Regulation
Mr. Siseho C. Simasiku: Chief Executive Officer
Ms. Mara Uazenga: General Manager Finance and Administration
Dr. Maxwell Muyambo: Manager Technical Regulation
Ms. Damoline Muruko: Manager Corporate Communication and Legal Services
Mr. Kenneth !Gaoseb: Manager Human Resources

Chairpersons Report
It is with sincere appreciation and a great sense of achievement that I, on
behalf of the Electricity Control Boards (ECB) board members, present the
2012 ECB Annual Report.
Despite the various challenges faced in the Namibian ESI, including shortage of generation capacity and rising costs, I am proud to confirm that the
ECB has posted notable achievements to improve the plight of the Namibian electricity consumer regarding access, affordability and availability of
electricity as well as improving the sector performance. The main focus of
the review period was further consolidation and enforcement of the regulatory regime to enable the above achievements.

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Access
The industrialisation status aspirations articulated in the national development plan or Vision 2030 document are complemented by the 2010 SADC
Regional Energy Access Strategy and Action Plan report which sets specific targets and detailed action plans. To generate the desired
impact, Namibias roadmap cannot be implemented in isolation, but through building up on the progressive regional initiatives. For
this to happen more effectively however, it is the ECB intention to streamline access- related issues to ensure that at both national and
regional levels, a common denominator is the point of reference.
These issues include:

Consensus and consistency on a concise, clear definition of access

Consensus on quantitative and qualitative methods used for national statistical data collection, review and verification.

To illustrate a case in point, the current access to electricity in Namibia is about 45 50%, taking into account the fact that urban Namibia is regarded as at least 78% electrified and electricity access in rural Namibia is at about 14%. In terms of the 2010 Master Plan
on Rural Electricity Distribution, access to electricity is defined as a household being within 500m radius from a low voltage supply point
(distribution transformer). During the update and review of the older version of the aforementioned Master Plan, the methodology that
was used to assess electricity access in rural areas was counting the number of electrified villages (homesteads) in the whole country
and use that figure as a ratio of the total number of villages (homesteads) countrywide.

Affordability and end user focus


The ECBs role in tariff setting remains crucial in ensuring that there is a healthy balance between affordability and sustainable operation
of the electricity sector.
The regulator remains committed ensuring that electricity tariffs remains cost reflective to sustain utility operations, promote economic
development, and to attract private sector investment/participation.
The cost of electricity remained on the increases mainly because of steadily rising generation, transmission and distribution costs. Electricity consumers earning low-income and poor households in particular face an increasing burden to pay for their basic energy needs.
In ensuring that the low income Namibians and the poor households have access to affordable electricity, the ECB commissioned a
project to devise a support tariff mechanism for low-income or vulnerable electricity users. In addition to promoting tariff affordability
for low income groups.

Electricity sector performance


With zero load shedding experienced in the Namibia ESI to date, the Namibia electricity sector has done exceptionally well in comparison with other players in the SADC region and beyond. Naturally, these high reliability levels always come at high cost and the regulator
has exercised sufficient prudence in consistently maintaining sustainable cost reflective tariffs as a fundamental requirement. Looking
forward, the regulator intends to investigate and support implementation of practical efficiency measures to reduce the additional cost
needed to sustain the current reliability levels.
It is important therefore, that electricity tariffs are not looked at in isolation, but concurrently with verifiable indicators of quality of sup-

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ply and service standards that will justify the end customers value for money.
The regional electricity supply situation continues to face challenges caused in part, by lack of adequate investment in the sector.
Despite the huge potential, many conceptualised power generation projects have not been implemented/realised. Apart from lack of
political commitment and preference of national priorities to regional ones, non-implementation of cost reflective tariffs has been one
of the major reasons. Since many power utilities have not been properly capitalised to enable them to implement generation projects
on the strength of their own balance sheets, they need to go into partnership agreements with private investors. The fact that electricity
tariffs are not cost-reflective has discouraged private investors from making investment commitments in the regions power sector, a
fact that has on average, worsened the reliability of electricity supply in the region.
It is unfortunate that those countries including Namibia that relied on electricity imports have not yet.

Security of supply
Reliable supply of affordable Energy is critical for national development and hence a national security issue.
The power supply situation is currently critical and is expected to remain as such until the Kudu Gas Power Plant comes on stream in
2018. The countrys current maximum (peak) demand is estimated at about 534 MW and grows by 4% annually. Namibia relies heavily
on imports of electricity ranging from 40% to 80% depending on the available internal generating capacity subject to seasonal variability of climatic/hydrological conditions and other factors.
Desirous to effectively address Namibias security of supply against the backdrop of perennial insufficient generation capacity within the
SADC region, the Ministry of Mines and Energy (MME) developed a National Integrated Resource Plan (NIRP).

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The NIRP development project commenced on 1 July 2011 and was completed on 30 April 2013, with the submission of the final
report which is expected to become public soon after endorsement and approval by the Minister of Mines and Energy. The first step in
preparing the NIRP was to develop a power-system demand forecast for the period 2011-2031. This considered the likely requirements
in each sector of the economy, reflecting projected economic and population growth rates. The forecast was adjusted by offsets from
energy efficiency gains considered possible from implementation of demand-side management programmes. Consideration was also
given to the achievement of Vision 2030 in the forecast.
Between 2012 and 2031 peak demand is projected to rise from 550 MW to 1100 MW while the energy demand is expected to rise
from 3,5 TWh to 7,5 TWh. A full range of power-generation technologies that could be of interest in Namibia were identified and
parameters, such as capital cost, operating cost, production capability and grid-connection costs, were estimated for each technology.
Using a generation-planning model, a large number of sequences consisting of combinations of generating plants that could satisfy the
projected power-system needs at a specified level of reliability was analysed.
The recommended NIRP will require a significant increase in investment in new generation and transmission assets to meet the
countrys increased power demands resulting from economic growth. The planned approach will reduce power imports primarily
through development of the Kudu power plant operating on Namibias offshore natural gas reserves, as well as increased use of
renewable power by developing solar PV, concentrated solar power (CSP) and wind-power plants. Taking advantage of the fact that
Namibia has one of the best solar radiation rates in the world, the Government is enabling the development of solar photovoltaic power
generation technologies through a special purpose vehicle, the Project Steering Committee (PSC) established to facilitate procurement
of 30 MW through a competitive bidding process. The adopted procurement mechanisms take care of all other renewable energy
technologies. The demand-side management program, complemented by the envisaged measurement and verification protocols/
guidelines, is expected to improve energy efficiency.

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Strengthening stakeholder engagement modalities


In order to improve on the engagement modalities with the key stakeholders, the ECB has prioritized Information sharing and keeping
the ECB up-to-date on relevant technical and engineering matters as an objective on the ECBs Strategic Plan. This is intended to
enhance regular consultations with MME, our licensees and end-use customers on various matters affecting the Electricity Supply
Industry as well as timely provision of any relevant information or any other type of assistance that may be required by our stakeholders.
During the period under review, the ECB continued to promote good governance in the electricity sector by consistently observing the
principles of transparency, accountability, predictability and stakeholder involvement in its decision-making processes.
The ECB is excited about the future as it steers the ESI into a new era with a strong requirement for more broad based participation on
all levels of the economy, where the ESI is required to be an enabler for growth and prosperity.
I wish to thank our valued stakeholders for their active participation and involvement in regulatory matters of the ESI as their
contributions were instrumental in enabling the Regulator to achieve its set objectives.

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Chief Executive Officers


Report
Highlights
The Electricity Control Board continued to encourage, solicit and facilitate
stakeholder participation in the affairs and activities of the Electricity Supply
Industry (ESI). Of great concern to stakeholders and policy makers alike
was the security of electricity supply in the immediate and medium term,
given the predictions of severe shortages of power in the SADC region in
the coming years.
The power supply situation remains a serious challenge until the expected
commissioning of the Kudu Gas Power Plant in 2018. The National Utility has
put measures in place through Short Term Critical Supply (STCS) programmes

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which should help the country manage the crisis until at least 2018.
I wish to emphasise, however, that NamPower will need the cooperation
and support of all stakeholders to succeed in effectively managing the
power supply situation.
The countrys current maximum (peak) demand is estimated at about 534 MW and on average grows by 4% annually. Namibia relies
heavily on imported electricity, varying from 40% to 80% during dry seasons when the Kunene River is low in water flow and the
Ruacana cannot be operated at full load. This scenario has rendered the countrys electricity supply situation critical as the future of
electricity supply is almost entirely at the mercy of external policy and decision makers. Namibia has an installed capacity of about
507.5 MW, but the actual output currently is only about 27% due to various technical and natural challenges such as the ageing of
the Van Eck power plant, the low water flow in the Kunene River due to poor rainfall, amongst others. Currently, NamPower meets
the national demand for electricity by generating at Ruacana Hydropower plant (27%); imports from ZESA (31%) imports from ZESCO
(12%), imports from Eskom (12%) and imports from Aggreko (18%).
As far back as 2006, the Regulator commissioned a study whose outcome recommended a number of demand side management
(DSM) options for Namibia. Major DSM initiatives that have been implemented to date include the distribution of energy saving bulbs
(CFLs and LEDs), replacement of electric geysers with solar water heaters, the use of ripple control of electric geysers by distributors (City
of Windhoek, Walvis Bay Town/Erongo RED), and Time of Use Tariffs.
Namibia is faced with the problem of not fully utilizing the multi-billion dollar Caprivi/Zambezi HVDC Transmission Link/interconnector
to the countrys benefit due to lack of generation and transmission capacity in northern neighbouring countries (Zambia, Angola and
Zimbabwe) and in Namibia itself.

The short-term critical supply (STCS) initiatives identified by the utility include the following:
a)

NamPower generation plants (refurbishment of Van Eck, and replacement of runners at Ruacana);

b) Import arrangements (including ZESA, Eskom, Zesco and Aggreko);


c)

Preparation for leasing of diesel generators (up to150 MW);

d) PPA negotiations with Independent Power Producers;


e) IPP Solar PV Tender for procurement of 30MW; and
f)

Demand side management (up to 110MW saving potential)

These Short Term Critical Supply initiatives are expected to be implemented during the period running up to 2017. It must be noted
that most of the STCS projects have serious financial implications as they come at very high cost and hence cannot be sustainable as
long term supply options.
The Kudu Gas Power Plant is expected to be completed and commissioned by 2018, generating about 800MW, 400MW of which will
be used inside the country with the remaining 400MW earmarked for export to neighbouring countries through their SAPP member
utilities.
Many of the projects implemented during the review period also seek to contribute to security of supply and to mitigate the impact
of shortages in the immediate- to medium-term. However, the National Integrated Resource Plan (NIRP) project currently under way
will investigate and propose least cost supply options that go beyond the immediate and medium terms. The NIRP project will elevate
power generation and security of supply from utility level to the national agenda status.
It is vital that the concept of least cost is understood in the appropriate context, taking cognisance of the clear distinction between

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financial cost which strictly looks at the dollar value per unit and economic cost which transcends a broader spectrum encompassing
opportunity cost, socio-economic and other factors affecting general well being of the nation and its inhabitants.
In our assessment of feasible options, it is important to bear in mind that options that could look financially attractive in the immediate
term may not necessarily be economically lucrative in the long run.

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Cross Cutting Matters


Legislative Report
Electricity and Energy Regulatory Authority Bills
The ECB, on authority of the Ministry of Mines and Energy, solicited technical assistance from the Commonwealth Secretariats Economic
and Legal Desks to develop the legal framework needed to support and facilitate the transformation of the regulator from electricity
regulation to energy regulation. The main outputs were the Energy and Electricity Bills that were developed and fully work-shopped
with industry stakeholders; these will be finalised before October 2013 and handed over to the Minister of Mines & Energy.
The objects of the Electricity Bill are:
a)

to achieve the efficient, reliable, sustainable and orderly development and operation of the electricity supply industry and
electricity infrastructure in Namibia;

b) to ensure that the interests and needs of present and future electricity supply industry customers are safeguarded and met, having
regard to the governance, efficiency, effectiveness and long-term sustainability of the electricity provision industry within the
broader context of economic energy regulation in Namibia;
c)

to facilitate investment in the electricity supply industry;

d) to enhanace access to electricity;


e) to promote the use of diverse energy sources and the application and use of energy efficiency;
f)

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to promote competitiveness and customer choice; and

g) to facilitate a fair balance between the interests of customers, licensees, investors and the general public in the electricity supply
industry.
The Electricity Bill was subjected to extensive stakeholder consultations facilitated by the Electricity Control Board. The Bill is currently
undergoing final comments especially around aspects of the electricity market model before it is submitted to the Minister of Mines &
Energy, to commence with the legislative promulgation process. The aforementioned will take the form of consultations with the Office
of the Attorney General, Cabinet Committee on Legislation and the Legal Drafters under the Ministry of Justice.
The Namibia Energy Regulatory Authority Bill mainly focuses on provisions regarding the establishment and operation of the to-beestablished Namibian Energy Regulatory Authority (NERA). The objects of the Bill are to describe NERAs roles and responsibilities, i.e.
h) regulate electricity, downstream gas including gas pipelines and storage facilities;
i)

regulate downstream petroleum pipelines and storage facilities;

j)

regulate renewable energy, energy efficiency and energy conservation;

k)

provide for its functions and duties; and

l)

provide for incidental matters related to the operations of the regulator.

NERA, as the ECBs successor, will thus have a broader mandate and includes additional energy resources that are to be regulated. The
Energy Regulatory Authority Bill was also subjected to extensive stakeholder scrutiny following a broad consultative process and is
now at an advanced stage of completion. Submission of the Bill to the Minister of Mines and Energy is awaiting the finalisation of the
Electricity Bill. The ECB is positive that both the Electricity Bill and the Energy Regulatory Authority Bill as well as the operationalisation
of NERA will be finalised during the next review period.

Regulatory Instruments
In the year under review the ECB Board approved various subordinate legislative instruments, including Technical and Economic Rules,
Distribution Infrastructure Standards, and the Optimised Maintenance Guidelines for the Distribution Sector. The requisite legal scrutiny
and promulgation was also undertaken. In addition, an increase of the ECB levy from 1.406c/kWh to 1.5c/kWh was approved.

Competition and Fair Play


Section 3(d) of the Electricity Act stipulates that the ECB is to ensure that a competitive environment exists in Namibias electricity
industry, with such restrictions as may be necessary for the security of electricity provision and the safeguarding of other public
interests. The ECBs Strategic Plan includes an initiative to monitor and ensure the implementation of and compliance with the principles
of fair play in the countrys electricity sector.
During the period under review the ECB had several engagements with the Namibian Competition Commission (NCC), culminating
in the signing of a Memorandum of Understanding (MoU) between the entities. In particular, the MoU serves to co-ordinate and
harmonise activities within each organisations mandate, and spell out the roles and responsibilities on matters of mutual interest. It
is expected that the collaboration between the NCC and the ECB will ensure greater consistency in the application of laws governing
anti-competitive behaviours, as well as in the case of mergers and acquisitions.
The MoU is an important milestone for the Electricity Supply Industry as a whole, as it aims to:
a)

promote and maintain fair competition and a stable environment within the electricity sector;

b) promote the development of competitive markets in the electricity industry;


c)

promote co-operation and co-ordination between the parties when dealing with cases of anti-competitive behaviour, as well as
to facilitate the treatment of mergers and acquisitions within the electricity industry;

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d) undertake any joint investigations, market enquiries or research studies in the electricity industry as the parties may agree;
e) ensure that the ECB exercises primary authority to set prices and tariffs, enforce performance and compliance and take appropriate
steps in case of non-performance and establish conditions within the electricity industries and the Commission exercises primary
authority to detect and investigate the alleged prohibited practices not covered by the Electricity Act and to review mergers within
the electricity industry, and
f)

improve the understanding of the roles of both the NCC and ECB, by undertaking studies on the effectiveness of competition within
the electricity industry.

Challenges with Regulation of Farmer Schemes


During the period under review, the ECB has embarked upon a project to identify ways to more optimally regulate farmer schemes.
The project is important because existing electricity distribution licensees do not want to extend their network to farms, which in turn
implies that farmers must make alternative arrangements to be electrified. One method of electrification is that each farmer invests
in their own generation equipment, while other farmers collaborate in farmer schemes to jointly benefit through the electrification of
their farms.
There has been a proliferation of farmer schemes in Namibia, which necessitates regulatory involvement and oversight. A part of the
ECBs regulatory functions includes that electricity utilities are compliant with the Electricity Act and its regulations. The farmer schemes
form part of the Namibian ESI, and consequently must operate within the rules governing the sector. The ECB has drafted pro forma
Shareholder and Supply Agreements which are to be implemented by farmer schemes across the country.

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Corporate Governance Compliance


The ECB has to comply with the provisions in the Electricity Act 4 of 2007, the recommendations of the King II Report, as well as the
State Owned Enterprise Governance Act 2006, and relevant subordinate legislation. One of the functions of the ECBs Board is to ensure
that the regulator remains complaint with relevant Namibian legislative provisions.
During the period under review, the ECB has adopted a Board Charter and the Board Committees Terms of Reference which guides
Board members in the execution of their duties.
The ECB Boards governance structure includes three distinct Board sub-committees. These advise the Board, and perform such tasks as
the Board may assign to them. The sub-committees are the
1) Finance, Audit and Risk Committee;
2) Human Resources and Remuneration Committee; and
3) Pricing and Tariffs Committee.
Under the Electricity Act, the Board and each sub-committee are required to conduct at least four scheduled meetings per year. In
addition, sub-committee meetings can be scheduled as determined by the task at hand.
The following list presents a summary of the items approved by the Board and Board Committees during the period under review:
a)

ECBs transformation process to the national energy regulator;

b) NamPowers tariff approval process;


c)

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Transmission and Generation Model;

d) ECBs Finance and Administration Policies and Procedures;


e) Development and Harmonisation of Distribution and Infrastructure Standards;
f)

Optimised Maintenance Practices Guidelines for the Distribution Sector;

g) ECB Job Attachment Scheme;


h) Acquisition of an ECB Building;
i)

Tender documentation for the procurement of 30 MW solar photovoltaic (PV) generation capacity for Namibia;

j)

Procurement Mechanisms for Renewable Energy projects in Namibia;

k)

Financial Model for the assessment of the financial viability of utilities;

l)

Economic and Technical Rules;

m) ECBs statistical framework; and the


n) ECBs Knowledge Management Framework.

Public Relations & Stakeholder


Management
Stakeholder consultations, Iincreased public awareness, education and branding, continued to be a broad focus area for the ECB and
are important components of the ECBs regulatory decision-making process.
During the period under review, the ECB consulted widely, and received extensive feedback on various regulatory matters and decisions.
Amongst those entities and parties consulted were the Ministry of Mines and Energy, NamPower, the REDs and other regulated entities,
industry stakeholders including the Renewable Energy Industry Association of Namibia and the Manufacturers Association, consumers
groups, the media and the general public.

Comments and feedback received during such consultative sessions form part of the critical inputs that are taken into account when
arriving at most of the ECBs regulatory decisions. In this way, topics such as the NamPower tariff adjustments, processing of license
applications, and the development of subordinate legislation such as rules, standards, codes and regulations were informed and
influenced by inputs provided by stakeholders.
The ECB endeavours to provide a public information and empowerment drive on all matters relating to the regulation of the electricity
industry. To this end, the ECB used various interventions to communicate directly and indirectly with stakeholders. These initiatives
included, amongst others, the regular updating of the ECBs website, presentations at industry forums such as the Electricity Supply
Industry Forum, the presence and contribution to numerous media events, including radio and television programs, as well as specific
publications.
In addition, the ECB monitors the daily print and electronic media for energy-related coverage in general, and specifically those of
relevance to the countrys electricity sector. The most significant news coverage in the period under review related to electricity tariffs
and the security of supply. In most cases, comments and coverage of issues related to the activities undertaken by the ECB were
reported factually and were neutral.

Corporate Social Responsibility


ECB, through its social investment arm, continued to invest in various community projects for the socioeconomic upliftment of the
Namibian society. Every year the ECB receives numerous applications from across the country.
During the period under review, over ten institutions ranging from primary to tertiary education, sports, local authorities, environment

19

and local and regional authorities received funding and donations from the ECB Social Responsibility Fund.
ECB currently supports a number of students pursuing their studies in various fields at tertiary institutions in Namibia and the SADC
region.

Human Resources

19

Staffing
Recruitment, Selection and Turnover
The ECB operates in a highly technical industry and requires
specialist skills. Employee competence, passion and commitment
are professional attributes that are encouraged at all levels, and
ensure that key personnel can be retained and recruited. This is
reinforced by the ECBs continuous commitment to attract and
retain a committed, competent and motivated workforce, which is
achieved by appropriately rewarding performance and recognizing
as well as promoting talented staff. During the period under review,
only one termination of employment took place.

Staff Numbers
The figure below depicts the number of staff per functional area. Of
a total staff complement of 24, the CEOs Office employs 4 persons,
while 10 persons each are working in the Finance & Administration
and Regulation sections respectively.

Figure 1: Employees By Functional Area

Staff Turnover
Over the past five years, the ECBs staff numbers increased, mainly in response to requirements brought about by the restructuring of
the Namibian Electricity Supply Industry. As shown in the table below, the ECBs staff turnover rate per year averaged over the past five

20

years stands at some 7% of total staff employed. This is to be compared to a Southern Africa staff turnover rate of some 10% per year,
which indicates that current staff attrition rates at the ECB compare favourably with regional experiences.
2008

2009

2010

2011

2012

Total Staff

17

19

19

22

24

Staff turnover

6%

0%

16%

9%

4%

% Turnover
Table 1: Staff Turnover

Promotion
During the period under review one employee was promoted from a specialist portfolio to a managerial position.

Key Challenge Experienced


In the period under review, a key challenge faced by the ECB was due to limited office space. Amongst others, a lack of sufficient office
space has resulted in the postponement of the planned establishment of the ECBs knowledge hub, which is one of the key strategic
objectives and slowed recruitment considerably. Also, the lack of recreational facilities for staff was noticeable.

Training and Development


On-going skills development and capacity building is a priority for the ECB. For the period under review, the ECBs total direct training and
development expenditure increased to some N$588,000, which was spent for training and development initiatives on:
a)

Skills development;

b) Technical and professional competence development;


c)

Leadership and management development; and

d) Tertiary Studies.

ECB staff attended courses on


a)

Utility Regulation and Strategy;

b) Managing Competitive Commercial Tenders;


c)

Management Development Programmes; and

d) RERA-SATH training.
The ECBs approach to skills development focuses on addressing the most pertinent in-house needs and requirements while ensuring
that capacity building takes place across all levels throughout the organisation.

Employee Wellness
The ECBs employee wellness strategy applies a holistic approach which recognizes that staff are human beings and not merely
workers. Various employee wellness and staff support programs are in place. For this period under review, the ECB introduced a
medical surveillance programme as part of the organisations comprehensive health and wellness policy. This implied that all staff
underwent baseline medical assessments, which underpin the preventative health care drive to improve productivity and reduce
employee absenteeism. Other wellness initiatives included, amongst others, teambuilding, commemoration of the Worlds Aids Day,
and supporting the cancer awareness campaign by Bank Windhoek.

Information Communication
Technology
The ECBs strategic plan identifies two ICT initiatives that are to be continuously undertaken, these are the information needs assessment;

21

and the ICT needs assessment.


For the period under review, the ECB undertook various ICT activities in support of these initiatives. In regard to the ECBs ICT network,
the internet speed was increased from a 512K to 1024k and an automated offsite backup service was implemented. As a result, the
internet connectivity was both stable and reliable. Also, the off-site backup allows for the quick recovery of ECB data in case of any
on-site data loss.
With regard to software, an enterprise Anti-virus solution was deployed, and a Fixed Asset module was purchased for the ECBs
accounting system, which allows for the recording and tracking of all fixed assets owned by the ECB. Two modules were added to
the existing HR/Payroll system, which now enables employees to apply for leave and overtime electronically. The administration of
antivirus services is now undertaken centrally, and all disruptions are monitored from a single point.
In a bid to enhance the efficiency of Board meetings, the ECB has initiated paperless Board meetings. These entail the acquisition and
use of iPads for members of the Executive Management Committee as well as all Board members. A commercial cloud storage service
enables Board Members to access all relevant information electronically. The paperless environment implies that it is no longer required
to physically prepare Board packs and have them delivered to Board members, which reduces costs for printing, paper and deliveries
and improves on the speed and efficiency of delivering Board packs.
The ECBs IT Governance framework stipulates how, when and by whom the ECBs IT resources can be accessed and used. In the period
under review, the strategic review of the ICT Policy and its alignment with ICT legislation took place. In particular, three IT policies were
developed, including the:
a)

IT Usage Policy, which provides guidelines for the use of the ECBs computing facilities;

b) Information Security Policy, which addresses the security of the ECBs data and information systems; and
c)

IT General Control Policies, which is to ensure the structured development, implementation and maintenance of all IT applications
used at the ECB.

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Economic Regulation
Tariffs
The regulation of electricity tariffs is one of the principal activities of the ECB. Tariff setting is done in accordance with the White Paper
on Energy Policy of 1998, which states that tariffs should be cost reflective, reflect the long-run marginal cost of supply, and be based
on sound economic principles.
Electricity tariffs charged by utilities are all regulated. Tariffs are based on a utilitys revenue requirement, including a regulated return
on assets used for electricity generation, transmission, distribution and supply. The tariff methodology applied by the ECB is known as a
cost plus methodology. This implies that the revenue requirement (i.e. the cost) of a utility plus a regulated return (i.e. the weighted
average cost of capital) determines the end-user tariff.
The revenue requirement includes all allowable costs of the utilities to cover the cost of supply including the primary energy, energy
imports, bulk electricity purchases, operating and maintenance costs, overheads, asset-related costs, and investment costs. In
determining the Namibian electricity tariff levels, the ECB consults and takes into consideration the expectations of key stakeholders
including the Government, private sector and consumers. It also assesses the likely impacts that tariffs may have on the end-consumers
and the Namibian economy at large before approving tariffs. Each utility needs to have its tariff levels approved by the ECB Board before
they may be implemented, and this process repeats itself on an annual basis.

Approved tariffs
For the financial year 2012/2013, the ECB granted NamPower an effective average tariff increase of 17.20% which includes a 2% long-

22

run marginal cost (LRMC) contribution. The LRMC portion was awarded to ensure that NamPower remains on the LRMC price path and
enable the utility to build sufficient reserves to protect the Namibian consumer against future price shocks.
Figure 2 depicts the projected electricity price path between 2011/2012 and 2019/2020.

Figure 2: Projected electricity price path between 2011/2012 and 2019/2020

Distribution utilities and Local Authorities were granted tariff increases according to their specific revenue requirements.
Over the past years, the ECB has ensured that electricity tariffs are consistent with and reflective of the following three main regulatory
objectives:
a)

Equitably rewarding of investors (recovery of allowable cost of supply plus the regulated rate of return) while keeping prices
affordable to consumers;

b) Ensuring quality of supply and service, taking cognisance of different quality standards and associated costs; and
c)

Maximising operational efficiency through restructuring and performance evaluation and monitoring.
LOCAL GENERATION

MWh

In general once tariffs have reached cost reflectivity they will

% Energy Supply

reflect the long- run marginal cost of supply. The LRMC includes

Local Power Stations


Ruacana

the cost of introducing new generation projects into the Namibian

1 236 597

35%

Van Eck

84 110

2%

Paratus

20

0%

Anixas

8 270

0%

During the year under review, Namibia continued to be a net

1 328 997

38%

importer of electricity. It is expected that this situation will

Total local generation

electricity mix and is to incentivise additional investments in the


sector.

change once new generation capacity is added to the existing


IMPORTS

23

MWh

% of Energy supply

Eskom

649 037

19%

Zesco

433 501

12%

ZESA

1 049 669

30%

45 600

1%

2 177 807

62%

Aggreko
Total imports

Table 2: Local Generation and Imports in 2012/2013

power stations, as envisaged in the National Integrated Resource


Plan (NIRP). In 2012/2013 Namibia imported approximately
62% of its electrical energy requirements from countries in the
SADC region, with Zimbabwe (ZESA) being the main source of
these imports.

23

In 2012/2013 Namibia imported some 62% of its electricity


requirements. During that period, the average tariff of imports
was higher than the Namibian local bulk generation -price. This
implies that the end-user tariff is substantially determined by
imports which the ECB has no influence

Local Generation

2008/09

2009/10

2010/11

2011/12

2012/13

versus Imports

over. In addition to cost due to imported


electricity, local tariffs are driven by the
following factors:

Percentage Energy
Local Generation

40%

35%

37%

49%

38%

Imports

60%

65%

63%

51%

62%

Percentage Cost

a)

the need for NamPower tariffs to

remain cost reflective;

b)

the need for additional investments

in the generation sector;

c)

increases in the prices of commodities

Local Generation

22%

46%

35%

36%

34%

and primary energy sources such as

Imports

78%

54%

65%

64%

66%

oil and coal; and

d)

the revaluation of NamPower assets

which occurs every five years.

Average price N$/kWh


Local Generation

0.32

0.43

0.36

0.28

0.45

Imports

0.52

0.40

0.38

0.47

0.55

Table 3: The Impact of Imports on Namibian Electricity Tariffs

Cost Reflectivity of Tariffs


During the period under review, NamPower was granted a cost reflective tariff as per the Cabinet directive (Cabinet decision
21/20.09.05/006.) which states that the utility tariffs should reach cost reflectivity by 2010/2011 and remain so thereafter.
The ECB has allowed tariff increases of distribution utilities to remain cost reflective in those cases where cost reflectivity has already
been reached, and to enable others to reach cost reflectivity. This presented a particular challenge to the ECB, mainly because of the high
local authority surcharges as well as the distorted tariffs which still exist amongst different distribution utilities and Local Authorities.

Local Authority Surcharge


The introduction of the REDs and the resulting handover of the electricity distribution function to REDs had the potential to significantly
impact on the financial positions of Local Authorities (LAs) and Regional Councils (RCs). Previously, LAs had used the revenues from
electricity sales not only to cover the cost of electricity purchases and distribution but also to cross-subsidise other municipal services.
In addition, many LAs/RCs sold electricity at prices which were higher than the cost of supply. This resulted in the creation of surpluses,
which in turn was used to pay for non-electricity services. The surplus contributed some N$213 million per year to the revenues of local
government and was a significant source of income to the LAs/RCs.
The Local Authority Surcharge was created to financially support LAs/RCs after they handed over the electricity supply function to the
newly formed REDs. The initial charge was based on the actual difference between revenue and costs as reflected in the ring-fenced
electricity accounts. This is consistent with Government policy that LAs and RCs should not be adversely affected when they joined a
RED.

24

As agreed to with relevant ESI stakeholders, the LA Surcharge is a fixed dollar amount per year, and has remained so over the past 7
years. Currently, the LA Surcharge is added to the electricity tariffs and collected by the REDs on behalf of the relevant LA/RC.

Transformation of the Single Buyer to Modified Single Buyer


Market Model
The Modified Single Buyer Model (Figure 3) is aimed at securing energy supply security and private sector participation in the electricity
generation sector. During the period under review, NamPower remained Namibias Single Buyer, and is the only utility licensed to
import, export and trade electricity. This also implies that NamPower is the only off taker of electricity sourced from any Independent
Power Producer (IPP) that would like to sell electricity. The Modified Single Buyer Model will allow IPPs to sell electricity to large power
users, such as, REDs, Local Authorities and Mines.
The process of finalising and implementing the so-called Modified Single Buyer Model is on-going. During the period under review,
little progress was made in implementing this new market model. This was mainly due to the structural changes that are still required
to transform the ECB into a multi-sectoral energy regulator. It is envisaged that the market model will be defined as part of the new
regulatory legislation, which will also make it easier to implement.

Figure 3: Proposed Modified Single Buyer Market Model

Economic Regulation Projects


25

In the year under review, the following projects as identified in the ECBs current Strategic Plan were implemented:

Generation and Transmission Tariff Review Model and Rule Book


The generation and transmission tariff review model which is used to determine NamPowers bulk tariffs was updated. In addition, a
tariff rule book was developed, which is part of the model. Both were approved by the Board, and are ready for implementation and
use in the review of the 2013 tariffs.

Utilities Financial Viability Model


The model is used to assess the financial viability of utilities. It relies on utility-specific data and information, which is now collected and
will be an input to the model. Reports from this model are expected to be published during the next financial period.

National Connection Charge Policy


A national connection charge policy was developed during the period under review. Two stakeholder workshops were conducted during
the last quarter of 2012. Internal consultations are on-going. Once finalised, the policy will be presented to the Minister of Mines and
Energy for promulgation, which is expected to take place before the end of 2013.

Development of Net Metering Rules


One of the recommendations of the Renewable Energy Procurement Mechanism study completed in 2011 was that net metering
was to be implemented in Namibia. For this to happen, net metering and interconnection rules are required, to allow small solar
photovoltaic (solar PV) and micro-wind generators to be connected to the local distribution grids.
A project funded by the Renewable Energy and Energy Efficiency Partnership (REEEP) through the Renewable Energy and Energy
Efficiency Institute (REEEI) at the Polytechnic of Namibia together with the ECB was initiated to devise the required net metering rules,
and a consultant was hired.

25

Stakeholder workshops and consultations were conducted at the beginning of the year 2013. The ECB will conduct an economic impact
assessment before the rules are promulgated, which is expected to take place at the end of 2013.

Renewable Energy Feed-In Tariffs (REFIT)


In implementing the recommendations of the renewable energy procurement mechanism study completed in 2011, the ECB embarked
on a project to develop renewable energy feed-in tariffs (REFIT) for all renewable energy technologies from 500kW to 5MW capacity.
With the financial assistance of USAID, a consultant was appointed to develop and draft REFIT levels and associated rules. Stakeholder
workshops and consultations are expected to be held during the next financial period. The ECB will conduct an economic impact
assessment before the promulgation of the rules, which is expected to take place at the beginning of 2014.

Study on a National Electricity Support Mechanism


This project aims to devise a mechanism to make electricity more affordable for low-income consumers. The project will identify and
assess regional and international options used to shield low income households against rising electricity prices.
The analysis will include a review of the relevant legal, regulatory, technical, financial and economic constraints and implications of
introducing electricity support tariffs, and develop scenarios on how such mechanisms can be funded. The study will also quantify the
impact that the introduction of an electricity support mechanism has on the countrys economy, the electricity sector as a whole, and
low income end-users.
The project is expected to be completed in December 2013, during which period consultations and workshops will be held with
stakeholders.

26

Update of the Namibian Network Asset Register (NENA)


This project will update the Namibian Network Asset Register (NENA), which is used to determine the asset values owned by distribution
licensees. NENA is updated bi-annually, and reflects the current replacement cost of all electricity network assets used by utilities.
The project is expected to be completed in May 2013, in time for distribution tariff review to be undertaken in the financial year
2013/2014.

Update of the ESI General Computable Equilibrium (GCE) Model


The ESI general computable equilibrium model is used to assess the impact that electricity tariffs have on the economy. The model is
currently updated, which includes the following activities:
a)

Review and calibrate the model to take Namibias current and forecast economic climate into account;

b) Update the operating manual describing the models functions;


c)

Assist the ECB in modelling the impact of NamPowers generation and transmission tariff on the Namibian economy; and

d) Align the model with the demand forecast from the National Integrated Resource Plan (NIRP).
The updated model will be used for the tariff review in the financial year 2013/2014, and is expected to be completed in May 2013.

27

Technical Regulation
Quality of Supply Profile for the Namibian ESI
The ECBs annual report of 2011/2012 reported on the Namibian ESI quality of supply profile, focusing mainly on data from the REDs
and large power users. In the period under review, Local Authorities became involved in the Quality of Supply project. This broadened
the scope of the original project, and necessitated additional capacity building in order to generate Quality of Supply reports.
Quality of Supply reports are important to understand and manage supply risks, and enhance the visibility and appreciation of aspects
relating to power quality management. The following comparative analysis illustrates the Quality of Supply reports for Okahandja and
Rehoboth for the month of February 2013, and emphasises the importance of power quality management in Local Authorities.

Quality of Supply for Local Authorities the Case of Okahandja and Rehoboth
The Quality of Supply reports focus on the assessment of four power quality parameters, namely
a)

dip and swell;

b) supply reliability;
c)

voltage magnitude; and

d) voltage unbalance.
Okahandjas power quality was assessed at the towns NamPower 11 kV intake, while NamPowers 11kV Dr Lemmer intake was where
the Rehoboth Town Councils power quality was recorded. Both assessments were undertaken in February 2013.

28

Applicable Standards
The standards used for the assessment are the South African National Rationalised Standards (NRS) 048 and the International Electrotechnical Commission (IEC) 61000 standard.

Dip and Swell Assessment


A voltage dip is a sudden reduction in root mean square (rms) voltage supply as defined in the above standards. The following events
in Table 4 were recorded:
Event Category

No of events for Okahandja

No of events for Rehoboth

Dip Type S

Dip Type T

Dip Type X1

Dip Type X2

Dip Type Y

18

Voltage Swell

Table 4

Supply Reliability Assessment


Supply reliability is expressed in terms of supply interruptions and customer load reductions. The NRS standard defines an interruption
as a disconnection of one or more phases of a supply to a customer for a period exceeding 3 seconds. For a given voltage level,
interruptions are classified as either momentary (if lasting for less than 5 min) or sustained (if lasting for more than 5 minutes). The
following (Table 5) interruptions were recorded:

Events in Okahandja

Duration in Okahandja

Events in Rehoboth

Duration in Rehoboth

Sustained interruption

Interruption Type

5 020 s

Momentary interruption

271 s

75 s

Table 5

Voltage Magnitude
The magnitude of supply voltage is expressed as a percentage of the ideal, declared root-mean-square voltage as defined in the above
standards. The following (Table 6) values were recorded:
Compatibility

Compliance

Worst

Non-

Compliance

Worst

Non-

level Rehoboth

assessment

compliance

110.0%

110.2%

level

assessment

compliance

Okahandja

Okahandja

Okahandja

110.0%

103.2%

0.0%

Criterion
Max 30 min

Rehoboth
3.6%

weekly value
Table 6

Voltage Unbalance
Voltage unbalance quantifies the contribution of negative sequence voltages as a percentage of positive sequence voltages as per the
above standards. Both sites were found to be 100% compliant during the assessment period.

Quality of Service Standards


29

Monitoring and enforcing compliance with the Quality of Service Standards was mainly done by addressing customer complaints. The
main concerns expressed were power outages due to network faults, quotations, connection charges and accounts / billing. Details on
complaints handling issues are covered under the section describing Regulatory Support Services.

Customer Complaints
The statistical analysis of customer complaints in the period under review reveals that some 80% of all concerns were related to noncompliance with the Quality of Service Standards.
Table 7 itemises the various categories of complaints that were received, specifying the relevant performance indicator, associated
activities and minimum standards that must be met at all times.

29

Performance Indicator

Activities

Guaranteed Standards

Processing Requests for Supply

feasibility studies;

Quotation time

applications;

Time to provide supply

quotations/estimates;
acceptance of quotation and payment;
design;
construction (including certificate of compliance);
commissioning and decommissioning;
supply contract between licensee and customer;
Credit Metering

meter reading (frequency)

Frequency of meter readings

billing (format, information provided and methods); Bill completion Delivery


account queries;
payment method;
payment venues (queuing times, operating hours);
special meter readings;
check-meter readings;
disconnections;
reconnections;
penalties for non-payment and theft;
meter auditing for accuracy;
Network Faults

30

availability and location of fault reporting centres;

Supply restoration time

hours during which faults may be reported;

after planned / forced

fault reporting procedures;

interruptions

telephone answering response time;


response times; time to restore supply;

Number & duration of


planned Interruptions

number and duration of interruptions; and


notification of planned interruptions.
Customer Complaints, Enquiries

Availability and location of service centres;

and Requests

telephone services; response times; and time


taken to resolve problems

Time to resolve a customer


complaint
Queries
Enquiries
Claims etc.

Table 7: Assessment of Customer Complaints Received

Wiremens Licensing in the Namibian ESI


In 2009, industry stakeholders raised concerns in regard to the process of licensing wiremen. The ECB then commissioned a study
culminating in a Status Report. It confirmed that the Namibian ESI has a fragmented licensing system for wiremen, and that wiring
licenses issued by one licensee are not necessarily recognised and accepted by other licensees.
In mid-2012, industry representatives renewed their call to address the wiremens licensing issue, and the industry faced an increase in the
number of disputes related to the matter. Following deliberations with national stakeholders, a Stakeholder Working Committee (SWC)
was established in August 2012. Chaired by the ECB, the SWC was mandated to assess the situation and formulate recommendations
on how to address the situation in the short term, medium term as well as the long term.

Between August 2012 and June 2013, the SWC conducted several stakeholder consultations locally as well as in South Africa, focusing
on institutional capacity building, localisation and the harmonisation of the wiremens licensing process.
A strategic planning workshop was scheduled for 6-7 May 2013 to map out the direction for the SWC, define the Committees Terms of
Reference, and identify a road map for an interim and a longer term solution.

Technical Audit of the ESI


Technical auditing entails a process to identify potential performance risks and how to effectively manage them using available
regulatory tools. The ECB intends to enhance the regulatory process to promote the ESIs economic and technical efficiency. This is to be
achieved through the
a)

implementation of incentive-based regulation;

b) use of performance benchmarks;


c)

use of the enforcement of industry-wide standards and regulations;

d) improvement of the supply quality and reliability;


e) promotion of the security of supply; and
f)

increased access to electricity services.

It was found necessary to develop an electricity audit manual and inspection guidelines in order to implement technical audits in a
structured and coherent manner.

Assessment of Power Supply Status to Essential Service Facilities


Following media-reported allegations surrounding the non-availability of life support systems as a result of power supply failures, the

31

ECB commissioned a project to assess the availability and reliability of power supplies to Namibian hospitals and other critical facilities.
Inspections conducted as part of the project focused mainly on the:
a)

security, availability and reliability of power supplies from the distribution grid as well as from uninterruptible power supplies
(UPS) and standby generation;

b) responsiveness and functionality of UPS systems and standby generation systems;


c)

availability and implementability of structured maintenance processes and associated operational capacities;

d) causes of reported and unreported incidents and accidents;


e) measures to enhance the safety, reliability and uninterrupted availability of essential services depending on power supply quality;
and
f)

an assessment of the state of compliance of safety, regulatory, statutory and best practice maintenance and operational procedures.

During the period under review, the ECBs technical team visited three regions, namely Hardap, Karas and Erongo, where critical service
facilities were inspected. Out of a total of 13 regions, 11 were fully covered. Outstanding inspections of the Khomas and Kunene regions
are scheduled for completion before December 2013.

Demand Side Management (DSM)


Initiatives
In 2006, a Demand Side Management (DSM) Study was conducted and identified DSM options for implementation in Namibia. The
ECB established a DSM Steering Committee in 2007, to facilitate the implementation of the recommendations of the study. In 2012, a
DSM specialist from the team undertaking the National Integrated Resource Plan visited the ECB, to investigate ways to achieve DSM
measures in Namibia.

31

The following DSM activities were identified:


a)

the need to conduct a Monitoring and Verification exercise; and

For the residential sector:


b) An awareness creation programme;
c)

Efficient lighting by way of a CFL and/or LED programme;

d) Dissemination of solar water heaters to reduce household electricity consumption and that of Government buildings; and
e) the use of efficient cooking appliances using biomass;
For the Government sector:
f)

revising building codes and related standards and regulations; and

g) Enforcing the Cabinet Resolution on the use of solar water heaters in Government buildings;
For the commercial sector:
h) An awareness creation programme;
i)

Implementing efficient lighting, refrigeration and air-conditioning systems; and

j)

Mandatory energy audit programmes for commercial facilities;

For municipalities:
k)

The measurement of energy shavings during ripple control periods;

l)

The use of efficient street lighting; and

m) The introduction of energy audit programmes;

32

For the industrial sector:


n) Awareness creation on load control measures through time of use tariffs;
o) Power factor correction improvements; and
p) The use of efficient air conditioners.

Renewable Energy and Energy


Efficiency
Namibia is endowed with abundant renewable energy resources. These need to be better integrated and used as part of the countrys
energy mix.
The ECB promotes the use of renewable energy technologies by supporting commercial private sector participation in the ESI. During
the review period, numerous potential investors seeking licenses or opportunities to invest in renewable energy projects approached
the ECB for support.
The ECB has also networked at national, regional and international levels in the field of renewable energy and energy efficiency. For
example, the ECB continues to support a project to revise outdated national building codes initiated by the Ministry of Mines and Energy
thorough the Renewable Energy and Energy Efficiency Institute. Another project that the ECB has actively participated in during the
period under review is the implementation of the pre-feasibility study on Concentrated Solar Power which is driven by the Ministry of
Mines and Energy.

Renewable Energy Procurement Mechanism


In 2009, the ECB commissioned a study to develop a framework and tariff methodology to ensure the greater use of the countrys
renewable energy resources. The study was conducted by the Renewable Energy and Energy Efficiency Institute. The studys findings and
recommendations were subsequently approved by the ECB Board, and presented to the Minister of Mines and Energy for endorsement
and approval.
In the period under review, the RE procurement mechanism Project Steering Committee (PSC) and the Project Management Unit (PMU)
were established and tasked to oversee and facilitate the implementation such mechanisms in Namibia. Of particular focus was the
procurement of 30MW of solar PV by way of a competitive bidding process. In addition, the ECB also commissioned projects on the
establishment of renewable energy feed-in tariffs and net metering, as found elsewhere in this report.

Addressing the Security of Supply


through the NIRP Development
The White Paper on Energy Policy has defined specific national demand and energy targets for 2010. In particular, these targets included
the greater use of local resources, that Namibia should be able to meet 100% of the system peak demand using local generation
sources, and that 75% of the countrys annual energy demand was to be covered from own resources.
In addition to the set targets, the policy clearly stipulates that:

33

a)

Supply should be based on a balance of economically efficient and sustainable sources;

b) Energy sector activities should promote and support private investments;


c)

High-voltage interconnectors should be established to connect to neighbouring countries to increase the regional trade in electricity;

d) Environmental and socio-economic sustainability should be promoted in all activities taking place in the sector; and
e) Electricity prices should be based on sound economic principles and reflect the long run marginal cost of supply.
Recognising that neither the 2010 demand nor energy targets were met, the Government resolved to enhance the security of supply
by developing a National Integrated Resource Plan (NIRP). The development of the NIRP commenced on 1 July 2011, and scheduled
to be completed by 30 April 2013.

Overview of the NIRP Process


The Terms of Reference for the NIRP project saw the project execution in five phases:

Phase 1: Development of Economic and Cost Assumptions

Phase 2: Development of Demand Forecast

Phase 3: Definition and Evaluation of Generation Options, Import Sources and Demand Side Management Options

Phase 4: Development and Analysis of Policy Implementation Scenarios

Phase 5: Conclusions and Documentation of the Outcomes and Results

Planning Parameters and Criteria


The following main parameters and model criteria were used:

Planning horizon, 2012 2031

Cost and present worth base: January 2012

No escalation for economic analysis

33

Currency: Namibian Dollar (N$) 1 US$ = 7.5 N$

Base discount rate: 10%; alternative cases, 8% and 12%

Cost of unserved energy: N$20/kWh

Duties and taxes are not included in economic study

Reliability criteria: Loss of Load Probability (LOLP) (5 days/year from 2012 to 2020, 2 days/year for the remaining years)

Emissions offset allowance N$40/ton

The NIRP Reference Demand Forecast


The NIRP reference forecast for peak demand and energy are shown in the graph (Figure 4) below. Between 2012 and 2031, peak
demand is projected to rise from 550 MW to 1100 MW, while the demand for energy is expected to rise from some 3 500 GWh to 7
500 GWh.

34

Figure 4

Technical Regulatory Tools


Technical Rules
Technical rules are to ensure that a conducive operating environment can be maintained. They include the relevant governance,
technical, safety and commercial obligations and responsibilities of all key stakeholders.
In the period under review, various submissions and presentations were made to the Executive Committee, the ECB Board, the Minister
of Mines and Energy as well as the Legal Drafters.

Grid Code
In 2012, the Transmission Grid Code was presented for review by stakeholders. Regular review is necessary as new developments
continuously shape the sector; in recent times the integration of renewable energy technologies became more important, which was
addressed in the last review.
In its updated form, the updated Transmission Grid Code now comprises the following seven components:
a)

Preamble

b) Governance code
c)

Network code

d) Information exchange code


e) System Operation code
f)

Metering code

g) Renewable Energy integration code

Safety Code
The Namibia Electricity Safety Code (NESC) was first gazetted in 2010, and re-gazetted in 2011. Since the target implementation date of
31 October 2012 it is with licensees for implementation. The ECB will monitor the effectiveness of the implementation process through
various stakeholder engagement activities.

Optimised Maintenance Guidelines


35

The Electricity Supply Industry (ESI) relies on sound infrastructure installations and consistent maintenance. Consequently, the ECB
commissioned a project to develop guidelines on best maintenance practices for the distribution sector. In December 2012, the ECB
Board approved the optimised maintenance practices document. Currently, preparations for the submission and presentation to the
Minister of Mines and Energy are under way.

Distribution Infrastructure Standards


The harmonisation of distribution infrastructure standards was identified as one of the important aspects ensuring reliable service
delivery. In the past, a variety of distribution standards were in use by licensees, and many used their own standards when adding to
existing infrastructure. In order to correct this shortcoming, the ECB embarked on a project to develop and harmonise the distribution
infrastructure standards applied by licensees. In December 2012, the ECB Board approved the new distribution infrastructure standard.
Currently, preparations for the submission and presentation to the Minister of Mines and Energy are under way.

Audit Manual
The ECB recognises the value of promoting economic and technical efficiency through the implementation of incentive-based regulation,
the use of performance benchmarks and improved enforcement of relevant standards and regulations. Here, a particular focus is to be
placed on the improvement of supply quality and reliability, promotion of security of supply and increased access to electricity services.
In line with these objectives, the ECB developed an Audit Manual and Inspection Guidelines, to guide technical audits that are carried
out to ensure the compliance of licensed entities with current standards and guidelines. The Audit Manual is to be used by authorised
inspectors as prescribed by the relevant regulatory policy or legislation.

35

36

Licensing
New Licenses
In the period under review, the following new licenses were granted:
a)

Evofield Energy Holdings (Pty) Ltd was granted a generation license for a 30MW solar PV power plant that is to be erected at
farm Safier No. 62 in the Karibib district of the Erongo Region. The license stipulates a phased implementation over three years
at 10MW per year.

b) Ark Industries Namibia (Pty) Ltd was granted a generation license for a 16MW biogas power plant that is to be erected at Rehoboth.
c)

Namibia Breweries Ltd was granted a generation license for a 1MW solar PV power plant for own consumption at its production
facility in Windhoek.

Amended Licenses
In the period under review, the following special conditional generation licenses were amended:
a)

Bush Energy Namibia (Pty) Ltd (C-BEND) had its licence amended, to extend the period of validity of special conditions to 30 April
2013, which also includes the name change of the company from Bio Energy Namibia to Bush Energy Namibia.

b) GreeNam Electricity (Pty) Ltd had its licence amended, to extend the period of validity from 20 to 25 years.

Renewed Licenses
In the period under review, the following licenses were renewed:
a)

43 supply licenses

b) 42 distribution licenses

37

c)

NAMDEB (Pty) Ltd was granted a renewal of its distribution license.

d) Local Authority distribution and supply licenses in areas initially earmarked for Southern RED and Central RED were renewed for
another year, as both REDs have not been established yet.

License Applications under Review


The following license applications are under consideration:
a)

Paramount Infrastructure Development (Pty) Ltd applied for a 22MW CSP generation license for a power plant to be erected at a
farm in the Khorixas district of the Kunene Region.

b) Africa Energy Corporation (Pty) Ltd applied for two (2) 4.9MW solar PV generation licenses for a plant to be erected at farm 38 in
Walvis Bay with the intention to sell the energy to a private off-taker.
c)

OKA Investment (Pty) Ltd applied for a 20MW solar PV generation license with the intention to sell the energy to a private offtaker.

d) Erongo Diagram Investment (Pty) Ltd applied for a 5MW solar PV generation license with the intention to sell the energy to a
private off-taker.
e) InnoSun (Pty) Ltd applied for six (6) solar PV generation licenses for the purpose of wheeling the energy generated at the various
facilities to their clients. Applications were submitted for the following sites: 10 MW for Omburu 1, 20MW for Omburu 2, 10MW for
Osona, 7.5MW for Mariental, 2.5MW for Seeis and 2.5MW for Omaruru.

Independent Power Producers (IPPs)


During the period under review, the ECB continued to receive six-monthly reports from IPPs. Such regular reporting assists the ECB in
better monitoring the activities of IPPs. In cases where applicants fail to comply with conditions as stipulated in their license, the regular
reporting enables the ECB to assess the commitment by the licensee and efforts undertaken to overcome potential barriers. In addition,
the assessment of the reasons why IPPs do not become operational offers insights into the many aspects that prevent greater private
sector participation in Namibias ESI. Table 8 provides some details on licensed IPPs in the country.

37

Licensee

Type

Size

Date Issued

Validity period

Comment

(years)
CBEND (Bush Energy Namibia)

Biomass

250 kW

1-May-10

Commercial

GreeNam Electricity (Pty) Ltd

Solar

30MW

1 June-11

25

operation to

Diaz Wind Power (Pty) Ltd

Wind

44 MW

1-Apr-07

22

start

300 MW

4-Apr-08

25

700MW

1-Nov-07

25

Vizion Energy Resources (Pty) Coal (CFB)


Ltd
Atlantic Coast Energy Company Coal
(Pty)

due

(pulverised)

Ark Industries Namibia (Pty) Biogas

Progress Report

16MW

1 Jan-13

25

210 (68) MW

1-Jun-07

20

Ltd
Namibia International Mining Diesel CCGT
Company (NIMC)

38

and not

Electrawinds (Pty) Ltd

Wind

50 MW

1-Nov-09

20

InnoWind (Pty) Ltd

Wind

60 MW

1-Mar-10

20

VTB Capital

Small Hydro

30 MW

15-Jul-07

20

Table 8: Licensed IPPs

License expired
renewed

Industry Analysis

Performance Management in the Electricity Sector


The ECBs Performance Management System enables the regulator to monitor the performance of licensees in accordance with
set industry benchmarks. The year under review exhibited some improvements in efficiency, security of supply, sustainability and
investment and growth, notably in densely populated areas. On the other hand, licensees in other areas continue to experience
challenges in regard to investment and growth.
Performance monitoring is improved if sufficient data is available from industry participants. The ECB uses the information collected
to set performance targets in close collaboration with licensees. The year under review has been the first year where industry wide
performance data was published in the ECBs Statistical Bulletin.

Licensing Compliance
As part of the compliance monitoring undertaken by the ECB, several inspections were conducted across the country. Although all
licensees comply with the minimum Quality of Supply and Service Standards, further improvements are needed to improve the overall
levels of compliance by licensees.
Customer service, customer awareness, and the communication between licensees remain industry-wide challenges. The ECB intends to
embark on a study to assess how compliance enforcement can be operationalised, and how rewards and incentives can be integrated
into operational procedures.

Customer Complaints
In accordance with the Electricity Act of 2007 (Act No. 4 of 2007), licensees are obligated to apply best practice principles to ensure highquality customer service levels. The ECB uses the Quality of Service Standards, Safety Code, Grid Code, Technical and Economic Rules and
Maintenance Practices as instruments to monitor and evaluate customer service levels across the industry.
During the period under review, the ECB received various electricity-related complaints from customers and licensees. The majority
of these complaints were addressed and resolved during the reporting period. The following categories of complaints were recorded:

Connection Charges: numerous complaints were received, these were resolved through direct consultations and
intervention by the ECB. Guidelines for connection charges were developed by the ECB and are relevant to all licensees.

Power Outages: during the rainy season, the ECB received numerous complaints. Select site inspections were carried out
by the ECB, and the necessary remedial actions were undertaken by affected licensees.

Billing and Accounts: two complaints were received during the period under review. After consultations with the parties
concerned, all issues were clarified.

Performance of Regional Electricity Distributors


3 Yr Average

2011/2012

2010/2011

2009/2010

3 Yr Average

ERONGO RED

2011/2012

2010/2011

2009/2010

3 Yr Average

CENORED

2011/2012

2010/2011

2009/2010

Benchmark

39

Key
Performance
Indicators

NORED

Financial Indicators
ROA

1%- 7%

4.2%

5.6%

5.9%

5.2%

2.6%

2.0%

1.1%

1.9%

10.54%

22.71%

7.53%

13.6%

Operating
Margin

17%

10%

14%

18%

14.1%

6%

4%

2%

3.9%

10%

21%

16%

15.7%

Current Ratio

>1

2.71

2.46

2.37

2.51

0.89

0.77

1.14

0.93

1.65

1.59

2.37

1.87

Quick Ratio

>1

2.25

2.41

2.27

2.31

0.77

0.63

0.94

0.78

1.36

1.42

2.27

1.68

81%

86%

86%

84.6%

84%

85%

85%

84.6%

93%

95%

92%

93.7%

58

59

63

60

45

51

42

46

81

90

55

76

Technical Indicators
Energy
Conversion
Efficiency

89- 97%

Commercial Indicators
Debtor days

32
70days

Operating Cost
/Sales

25-40%

20%

18%

26%

21.5%

24%

25%

36%

28.4%

15%

16%

42%

24.6%

Bad Debts (%)

0.3-1.3%

1.7%

1.1%

0.0%

0.9%

1.0%

0.5%

0.3%

0.6%

0.5%

0.3%

0.4%

0.4%

Efficiency Indicators
Customers/
Employee

137-555

332

347

364

348

127

111

114

117

137

123

286

182

Energy Sold /
Employee kWh

2400-

1471

1701

1620

1598

1013

855

891

920

1561

1466

1371

1466

0.57

0.67

0.81

0.68

0.61

0.70

0.99

0.76

0.56

0.66

0.78

0.67

AVG Power
Purchasing
Cost (N$/kWh)

9600

Table 9: RED Performance Against Industry Benchmarks


Source: NORED, CENORED, and ERONGO RED Financial Statements

39

The electricity distribution industry maintained viability over the financial period 2011/2012. Based on the performance benchmarks
imposed by the ECB, the results obtained are indicative of a maturing sector.
Erongo RED recorded the greatest performance improvements amongst the REDs. The company maintained a healthy financial position,
significantly decreased its debtor days, and maintained energy losses at 6.3%. The company also recorded the lowest average power
purchasing cost at N$ 0.67/kWh.
Of concern is the performance of CENORED. The company has the greatest number of exNamPower customers of all REDs in Namibia,
and its distribution area is characterised by its sparse population which implies high costs and low efficiencies. Energy losses 15% were
recorded, and the growth in consumption remains a concern to the ECB.

Performance of Distributors Outside the RED Areas


3 Yr Average

2011/2012

2009/2010

2010/2011

Oshakati Premier Electric (Pty) Ltd

3 Yr Average

2011/2012

2010/2011

2009/2010

Benchmark

Key
Performance
Indicators

Southern Electricity Company (Pty) Ltd

Financial Indicators

40

ROA

1%- 7%

18.2%

8.0%

-4.1%

7.3%

12.76%

4.81%

7.84%

8.5%

Operating
Margin

17%

22%

4%

-2%

8.0%

12%

5%

8%

8.5%

Current Ratio

>1

1.85

2.94

2.72

2.50

1.74

1.36

1.73

1.61

Quick Ratio

>1

1.58

2.41

2.09

2.03

1.66

1.29

1.63

1.53

75%

78%

90%

81%

96%

92%

91%

93.0%

Technical Indicators
Energy
Conversion
Efficiency

89- 97%

Commercial Indicators
Debtor days

32
70days

103

55

54

71

37

45

31

37

Operating Cost
/Sales

25-40%

78%

38%

40%

52%

29%

32%

31%

30.8%

Bad Debts (%)

0.31.3%

0.3%

1.1%

1.2%

1%

0.2%

0.2%

0.2%

0.2%

Efficiency Indicators
Customers/
Employee

137-555

229

232

260

240

107

112

111

110

Energy Sold/
Employee kWh

2400-

1546.84

1670.59

1955.79

1.724

1306.77

1304.44

1333.31

1.315

0.71

0.78

0.91

0.80

0.63

0.70

0.79

0.71

AVG Power
Purchasing
Cost (N$/kWh)

9600

Table 10: Non-RED Performance Against Industry Benchmarks


Source: SELCO and OPE Financial Statements
SELCO is primarily engaged in providing electricity to municipalities in the southern part of Namibia, which is currently not in a RED area.
The company has management contracts with the municipalities of Karasburg, Aranos and Keetmanshoop and supplies electricity to
these communities.

SELCO has recorded notable improvements in its financial and technical performance. The company decreased energy losses to 10%,
noting that the distribution area is sparsely populated. This was mainly achieved by implementing strict maintenance and operational
practices and applying metering management and theft control measures.
Oshakati Premier Electric (OPE) provides electricity to the Oshakati municipal area. The company has maintained commendable
performance in a regulated industry, meeting benchmarks targets on the majority of the industry-wide performance indicators.

Performance by Municipal Electricity Distributors


The majority of the electricity-specific performance data is not available from municipalities because the electricity business is not
sufficiently ring-fenced from their operations.

3 Yr Average

2011/2012

2010/2011

2009/2010

3 Yr Average

Okahandja Municipality

2011/2012

2010/2011

2009/2010

Benchmark

Key
Performance
Indicators

City of Windhoek

Technical Indicators
Energy
Conversion
Efficiency

89- 97%

90%

93%

92%

91.9%

76%

79%

79%

78.0%

Efficiency Indicators
137-555

464

411

408

427.40

190

216

211

206

Energy Sold/
Employee kWh

2400-

5.949

5.598

5.431

5.659

1.217

1.273

1.275

1.255

0.54

0.65

0.78

0.66

0.59

0.69

0.84

0.70

9600

3 Yr Average

2011/2012

2009/2010

3 Yr Average

Gobabis Municipality

2011/2012

2010/2011

Benchmark

2009/2010

Mariental Municipality

2010/2011

AVG Power
Purchasing
Cost (N$/kWh)

Key
Performance
Indicators

41

Customers/
Employee

Technical Indicators
Energy
Conversion
Efficiency

89- 97%

89%

86%

87%

87.3%

93%

0%

93%

62%

Efficiency Indicators
Customers/
Employee

137-555

Energy Sold/
Employee kWh

24009600

0.58

0.68

0.83

0.70

0.58

0.83

AVG Power
Purchasing
Cost (N$/kWh)

Table 11: Performance Municipal Distributors Against Industry Benchmarks


Source: Operating Reporting Manual

41

Performance by Village Authority Distributors


Most village authority distributors have not ring-fenced their electricity distribution business from other operations. This implies that
most of the electricity-specific performance data is not available from such village authority distributors.

3 Yr Average

2011/2012

2010/2011

2009/2010

3 Yr Average

GOCHAS

2011/2012

2010/2011

2009/2010

3 Yr Average

AROAB

2011/2012

2010/2011

2009/2010

Benchmark

Key
Performance
Indicators

LEONARDVILLE

Technical Indicators
Energy
Conversion
Efficiency

89- 97%

96%

71%

75%

80.7%

79%

76%

78%

77.9%

84%

81%

78%

81.2%

Efficiency Indicators
Customers/
Employee

137-555

Energy Sold /
Employee kWh

24009600

1458.9

1471

1701.3

1543.73

1247.92

1013.49

854.68

1038.7

1789.46

1561.48

1466.49

1605.81

0.88

0.83

0.92

0.88

0.71

0.81

0.90

0.81

0.74

0.80

0.88

0.80

AVG Power
Purchasing
Cost (N$/kWh)

Table 12: Performance of Village Distributors Against Industry Benchmarks


Source: Operating Reporting Manual

Performance by NamPowers Distribution Areas


NamPowers distribution business is mostly for customers
outside the existing RED area, and consists of re-distribution
3 Yr Average

2011/2012

2010/2011

Benchmark

2009/2010

NAMPOWER DISTRIBUTION
Key
Performance
Indicators

42

customers at Local Authority and village level and farms.


The performance results indicate a high degree of liquidity
coupled to the maintenance of operational costs at some 10%

Financial Indicators
Current Ratio

>1

4.98

3.73

3.38

4.03

Quick Ratio

>1

4.75

3.55

3.27

3.86

89- 97%

87%

87%

86%

87%

of sales.

Technical Indicators
Energy Conversion
Efficiency
Commercial Indicators
Debtor days

32 70days

114

131

102

115

Operating Cost /Sales

25-40%

9%

11%

10%

10%

Efficiency Indicators
Customers/ Employee

137-555

652.00

665.50

450.17

589.22

Energy Sold/
Employee kWh

2400-9600

0.48

0.49

0.36

0.44

Table 13: NamPowers Distribution Performance Against Industry Benchmarks


Source: Operating Reporting Manual

Performance of Farmer Schemes


For a number of reasons, existing

FINKENSTEIN

2010/2011

2011/2012

2 Yr Average

4.3%

4.2%

4.2%

-14.3%

-13.4%

-13.9%

92.9%

77.9%

85.4%

Operating
Margin

17%

21%

14%

17.5%

-182.3%

-34%

-108.3%

33%

12%

22.5%

Current Ratio

>1

0.16

2.58

1.37

1.18

1.18

1.18

3.83

1.36

2.60

83%

84%

84%

89%

76%

82%

90%

90%

2011/2012

Benchmark

2 Yr Average

1%7%

2010/2011

ROA

Key
Performance
Indicators

2 Yr Average

electricity distribution licensees do

2011/2012

SWART RAND

2010/2011

KHOMAS POWER

Technical Indicators

electrification is that each farmer


invests in their own generation plant
and equipment, while other farmers
collaborate in farmer schemes to jointly
their farms. Although REDs and formal
distribution entities are in place, most
farmer schemes continue to operate

2540%

65%

49%

57%

27%

23%

25%

106%

88%

97.4%

either under the license of a RED, or


under own license when in areas

Efficiency Indicators
Customers/
Employee

must make alternative arrangements

benefit through the electrification of

8997%

Commercial Indicators
Operating Cost
/Sales

which in turn implies that farmers


to be electrified. One method of

Financial Indicators

Energy
Conversion
Efficiency

not extend their network to farms,

137555

AVG Power
Purchasing
Cost (N$/kWh)

18

21

19

17

17

17

0.00

1.13

1.31

1.22

1.03

1.09

1.06

1.18

1.11

1.15

where such formal distribution entities


have not yet established themselves.
Farmer schemes are often operated

43

by the owners for whom the efficient


Table 14: Farmer Schemes Performance Against Industry Benchmarks

distribution of electricity may not be

Source: Operating Reporting Manual

a high priority. This is evident from


the results shown in the performance
report.

Transmission Overview
The results obtained from NamPowers transmission business
indicate a healthy transmission sector. Liquidity ratios are well3 Yr Average

2011/2012

2010/2011

2009/2010

Benchmark

Key
Performance
Indicators

NAMPOWERS TRANSMISSION & SUPPLY LICENSE

margin of 10%, the companys transmission business maintained


efficient and profitable operations. The periodic review indicates
that NamPower managed to realise greater revenues without

Financial Indicators
Current Ratio

>1

4.98

3.73

3.38

4.03

Quick Ratio

>1

4.75

3.55

3.27

3.86

increasing cost.
NamPowers transmission business recorded an average load

Technical Indicators
Load Factor

Context

53%

54%

55%

54%

Network Utilisation
Factor

Tracking

3.2%

3.5%

2.2%

Energy Conversion
Efficiency

84%-95%

93%

88%

88%

90%

25-40%

11%

9%

10%

10%

Commercial Indicators
Operating Cost /Sales

above the benchmarking rate, and at an average operating

factor of 54%, which includes the supply to Skorpion Zinc Mine.

Table 15: NamPowers Transmission Performance Against


Industry Benchmarks

43

Generation Overview
3 Yr Average

2011/2012

Plant Availability

Tracking

100%

112%

87%

100%

improvement in the plants utilisation factor over the financial

Energy Conversion
Efficiency

84%-95%

51%

50%

65%

55%

period 2011 / 2012 is the result of the commissioning of the

Benchmark

2010/2011

Ruacana Power Station

2009/2010

Key
Performance
Indicators

Ruacana Power Station

The 240MW hydro-electric Ruacana power station was built in


1978. Its generating capacity was recently upgraded to 341MW.
The power plant is well maintained and operates reliably. The

Technical Indicators

4th turbine.

Efficiency Indicators
Plant Utilisation Factor

87-90%

59%

59%

76%

65%

Employees/MW
installed Capacity

0.67-2.06

0.24

0.23

0.23

0.23

Van Eck Power Station


The 120MW Van Eck power station was Namibias first power
plant, and was built in 1973. As is evident from the performance

Table 16: Ruacana Power Station Performance Against Benchmarks

results, it is not efficient to operate the plant, which also implies


that NamPower has decided to refurbish it to extend the life-ofplant by a further 5 years.

3 Yr Average

2010/2011

Plant Availability

Tracking

100%

101%

92%

97.3%

Energy Conversion
Efficiency

84%-95%

3.7%

2%

1%

2.3%

87-90%

5.2%

2.1%

1.5%

2.9%

Benchmark

2011/2012

Paratus Power Station

2009/2010

Key
Performance
Indicators

Van Eck Power Station

Efficiency Indicators
Plant Utilisation Factor

The performance results indicate that the plant is minimally


used, which is the result of its overall condition. In the financial
period 2011/2012, the plant utilisation factor decreased to

Technical Indicators

0.14%.

Anixas Power Station


The 22.5MW diesel-powered Anixas power station was

Table 17: Van Eck Power Station Performance Against Benchmarks

commissioned in 2011, and is considered an emergency supply


option due to its high production cost.

Technical Indicators

92%

97%

94.2%

84%- 95%

88%

83%

85.7%

Plant Utilisation Factor

87-90%

1.13%

1.07%

1.1%

Employees/MW

87%-90%

145%

145%

145.5%

99%

98%

100%

99%

Efficiency

84%-95%

119%

162%

12%

98%

Efficiency Indicators

1.39%

1.91%

0.14%

1%

Employees/MW
installed Capacity

0.67-2.06

0.75

0.75

1.33

0.94

Table 18: Paratus Power Station Performance Against Benchmarks

3 Yr Average

Tracking

Energy Conversion
Tracking

87-90%

2011/2012

Plant Availability

Energy Conversion
Efficiency

Plant Utilisation Factor

2010/2011

Technical Indicators

Plant Availability

Efficiency Indicators

Benchmark

3 Yr Average

2011/2012

2010/2011

2009/2010

Benchmark

Paratus Power Station

Key
Performance
Indicators

Anixas Power Station

Key
Performance
Indicators

44

The 24MW Paratus power station was commissioned in 1976.

installed Capacity

Table 19: Anixas Power Station Performance Against


Benchmarks

Key ESI Statistics


This part of the report contains a brief industry overview. More detailed analyses would be made available in the ESI Statistical Bulletin,
2013. The information presented here is collected annually by the ECB through tariff application requirement as well as per license
information.
Erongo RED, NamPower Distribution and NORED show increased consumption since 2010/11. In the period under review, the
consumption of electricity in CENORED, OPE and southern Namibia remained largely static at some 50 GWh per year. As shown in Figure
5, total consumption is steadily increasing, from some 1 500 GWh in 2006/7 to more than 2 000 GWh in 2012/13.

45

Figure 5: Total electricity consumption


Source: ECB Operating Reporting Manual, 2012.
The data presented in Fig 6 is given according to the three main customer categories of the Namibian ESI, namely domestic, commercial
and industrial. It illustrates a steady growth over the years in each customer category more specifically in the domestic category. This
trend can be attributed to the natural growth in the respective licensed areas.

Figure 6 Number of customers


Source: ECB Operating Reporting Manual, 2012.

45

Figs 7 and 8 shows Namibias electrification rate as well as the consumption per capita in comparison to other countries. From the
two graphs, one can clearly see that Namibia needs to double its efforts in order to achieve its Vision 2030 objectives. During the next
financial year, the ECB will embark on a project to develop a mechanism to increase the electrification rate throughout the country.

46

Figure 7: Electrification Rate %


Source: Data from IEA WEO 2010

Figure 8: Electricity consumption per capita (2012)


Source: Data from IEA WEO 2012

Figure 9 shows the average electricity price path since 2006/7. The gradual price increase over the past years is evident. Of note are
the steep price increases since 2009/10. The average retail price of electricity has more than doubled in the last six years in Namibia.

Figure 9: Average electricity price path


Source: ECB Operating Reporting Manual, 2012.

47

47
Figure 10 depicts the annual average percentage increase of electricity prices for each distribution area. Average price increases have
generally been less than 20% per year.

Figure 10: Percentage annual increase of the electricity price


Source: ECB Operating Reporting Manual, 2012.

Figure 11 shows the annual peak demand for electricity in Namibia, excluding the demand by Skorpion Zinc Mine, and the installed
local generation capacity. As is evident, the peak demand requirement outstrips the available supply capacities since 2006.

Figure 11: Annual peak demand and installed capacity


Source: NamPower Tariff Application Requirement, 2012.

48

Status Of Strategic Plan Projects


Table 20 below lists the Strategic Plan projects undertaken during the reporting period, and their respective degree of completion.
Project Name

49

Completed

Implementation

Develop Regulatory Framework for Renewable Energy

50%

Implementation to commence in

Conduct study on penalties & enforcement mechanisms

10%

new financial year

Farmer Schemes: Investigate the Farmer Schemes and recommend solutions

10%

Draft & Implementation legislation for transformed Regulator

100%

Improve Working Environment

30%

Improve Finance & Admin Policies & Procedures

100%

Design & Implement New Org. Structure

10%

MIS management

100%

Review & update economic regulations

100%

Establish knowledge hub/library

100%

Study for feasibility of electricity support tariff

20%

Project to be finalised during the

Develop financial model to assess viability of licensees

50%

next financial year

Investigate the implementation of Net Metering

80%

Develop a national connection charge policy

90%

Support development of National Integrated Resource Plan

90%

Study of contestable customer Streamline Tx & Dx voltage

60%

Develop a PM Office with standard methodologies including Training

10%

Streamline licensing processes & procedures

10%

Development of a renewable energy map for Namibia

10%

Quality of supply & services standards implementation

100%

Improve statistical framework: develop & implement statistical framework

100%

QoS database analysis

20%

System operations for QoS standards for all REDs & CoW

80%

Activities promoting Renewable Energy Awareness

100%

Develop an ESI Performance Management Framework

100%

49

Project in implementation phase

Table 20

Regional & International Activities


RERA Activities
The ECB is a member of the Regional Electricity Regulators Association of Southern Africa (RERA), which was established by SADC
Ministers in 2012. RERAs mandate is to promote capacity building, information sharing, sharing of experience amongst regulators, cooperation on issues affecting the economic efficiency of regional electricity trade, harmonising regulatory frameworks to enhance the
viability of the regional electricity industries, promote regional electricity trade, and facilitate regional ESI systems integration. Currently,
10 SADC countries are members of RERA.

During the period under review, the ECB participated in a number of regular RERA activities, including the attendance of meetings,
capacity building training sessions, and special events. In addition, the ECB participated in all scheduled meetings of the Economic,
Legal and Technical Regulation Subcommittees, the Portfolio Committee Meetings as well as the Annual General Meeting. The ECB was
also actively involved in the planning, organisation and hosting of RERAs 10th anniversary celebrations which took place in Namibia
in November 2012.

African Forum for Utility Regulators (AFUR) Training


The African Forum for Utility Regulators (AFUR) focuses on issues related to the regulation of energy, telecommunications, transport,
water and sanitation industries. A particular emphasis is placed on aspects that are common across sectors. AFUR aims to establish and
foster co-operation amongst utility regulators on the African continent in support of Africas growth and socio-economic development.

Electricity Markets, Cross Border Trading and Power Pools


The event took place in Harare, Zimbabwe, from 20 to 23 August 2012. It was organised by AFUR and co-hosted by SAPP. It focused on
the role of power pools which are emerging in Africa and its sub-regions, and the different electricity market models.
Power pools arise when different national and regional electric supply systems are interconnected, which is one method to ensure that
power is supplied reliably and economically while meeting the combined load requirements of member states. The electric output from
different power plants in participating countries are pooled together, and dispatched according to merit order economic principles,
to meet the overall combined system demand. Power pools therefore create the condition for individual power systems to be operated
as part of a bigger system, leading to economies of scale.

50

In Africa, most of the countries are either operating a vertically integrated or single buyer electricity market models, with little or no
competition in the generation or the wholesale segment of the market.

Consumer Participation in Regulation of the Infrastructure Sector


AFUR conducted a training workshop entitled Enhancing Consumer Participation in Regulation of the Infrastructure Sector as part of
the 9th Annual General Meeting which was held from 17 to 18 April in Pretoria, South Africa.
The workshop assisted course participants to better appreciate the various levels of consumer engagement in the regulatory process,
to enhance the understanding of participants on the effects of customer participation in this process, and to ascertain whether African
regulators have put the necessary mechanisms in place to safeguard the interests of consumers and electricity end-users.

World Energy Council


The ECB is a member of the National World Energy Council Member Committee. The committee aims to promote and inform national
energy strategy with regard to the provision of energy in Namibia, by way of an optimised and unbiased ranking of energy resources in
Namibia to increase the countrys electricity generation capacity, and the expansion of transmission and distribution networks.
The national committee is chaired by Mr Simasiku the CEO of ECB. In November 2012 the ECB attended the WEC executive assembly in
Monaco, and also participated in all the national WEC activities held during the year under review.
Through the WEC work program the ECB participated in a study group on Knowledge Network on Mobility. The group published a
report entitled Global Transport 2050; the aim of the project was to construct and describe few potential global mobility and transport
scenarios that reflect potential developments in transport fuels, technologies, systems, and environmental policies over the course of
the next forty years.

51

Annual Financial Statements


for the year ended 31 March 2013
Contents
Board members responsibility for financial reporting..........................................................................................................................53
Board members approval of the annual financial statements............................................................................................................53
Independent auditors report........................................................................................................................................................... 54 - 55
Report of the Board members..................................................................................................................................................................56
Statement of comprehensive income......................................................................................................................................................57
Statement of financial position.................................................................................................................................................................58
Statement of changes in reserves............................................................................................................................................................59
Statement of cash flows............................................................................................................................................................................60

52

Notes to the annual financial statements......................................................................................................................................... 61-74


Detailed statement of comprehensive income................................................................................................................................75-76

Board Members Responsibility For Financial Reporting


The members of the Board are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial statements and related information. The financial statements have been prepared in accordance with
International Financial Reporting Standards. The Boards independent external auditors have audited the financial statements
and their report appears on pages 54 to 55.
The Board members are also responsible for the systems of internal control. These are designed to provide reasonable but
not absolute assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain
accountability of assets, and to prevent and detect material misstatement and loss. The systems are implemented and
monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the
attention of the Board members to indicate that any material breakdown in the functioning of these controls, procedures and
systems has occurred during the year under review.
The annual financial statements are prepared on a going concern basis. Please refer to page 56 of the Members report where
the appropriateness of the going concern assumption is discussed in detail.

Board Members Approval of the Annual Financial


Statements
The annual financial statements set out on pages 56 to 74 were approved by the Board members on 24 September 2013 and
are signed on their behalf by:

53

Board member

Board member

Independent Auditors Report


To The Member Of Electricity Control Board
We have audited the annual financial statements of Electricity Control Board, which comprise the statement of financial position
as at 31 March 2013, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows
for the year then ended, the report of the Members, and a summary of significant accounting policies and other explanatory
notes, as set out on pages 56 to 74.

Directors responsibility for the annual financial statements


The Companys directors are responsible for the preparation and fair presentation of these annual financial statements in
accordance with International Financial Reporting Standards and in the manner required by the Electricity Act (No 4 of 2007),
and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.

Auditors responsibility
Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance whether the annual financial statements are free from material
misstatement.

54

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial
statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material
misstatement of the annual financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the annual financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the annual financial statements present fairly, in all material respects, the financial position of the Electricity
Control Board as at 31 March 2013, and of its financial performance and its cash flows for the year then ended in accordance
with International Financial Reporting Standards and in the manner required by the Electricity Act (No 4 of 2007).

Independent Auditors Report


To The Member Of Electricity Control Board (Continued)
Other matter
Without qualifying our opinion we draw attention to the fact that the supplementary information set out on page 21 does not
form part of the annual financial statements and is presented as additional information. We have not audited this schedule and
accordingly we do not express an opinion on it.

Deloitte & Touche


Registered Accountants and Auditors
Chartered Accountants (Namibia)
Per AA Akayombokwa
Partner
Windhoek
24 September 2013

55

Report of The Board Members


For The Year Ended 31 March 2013
The Board members have pleasure in presenting their report on the activities of the Board for the year ended 31 March 2013.

Background And Operations


The Electricity Control Board was established by the Government of the Republic of Namibia in terms of the Electricity Act No
2 of 2000 (repealed by Electricity Act No 4 of 2007), to exercise control over the electricity supply industry and to regulate the
generation, transmission, distribution, use, import and export of electricity in accordance with prevailing Government policy so
as to ensure order in the efficient supply of electricity.

Results
The results of the Board are fully set out in the attached annual financial statements.

Dividends
No dividends have been paid or declared during the year (2012: Nil).

Board Members and Secretary


The members of the Electricity Control Board during the year and at the date of this report were as follows:
Mr. Jason Nandago

(Chairperson)

Mr. Gersom Katjimune

56

Ms. Panduleni Shimutwikeni


Mr. Fritz Jeske
Adv. Gottlieb Hinda
Board Secretary
Ms Damoline Muruko
Business address:

Postal address:

No 8 Bismarck Street

P O Box 2923

Windhoek Windhoek
NAMIBIA NAMIBIA

Subsequent Events
The Board members are not aware of any fact or circumstance, which occurred between the date of the financial statements
and the date of this report, which might influence an assessment of the Boards state of affairs and require disclosure in these
financial statements.

Going Concern
The Board earned a surplus of N$ 13 203 981 (2012: N$ 13 083 980) and a surplus of N$ 1 872 733 is forecasted for the
2013/14 financial year. The Board has also accumulated sufficient surplus to absorb any future losses and together with
future revision to the levies, these will ensure the operational existence of the Electricity Control Board and this confirms the
appropriateness of the going concern basis in the preparation of the annual financial statements.

Statement Of Comprehensive Income


for the year ended 31 March 2013

Notes

2013

2012

N$
REVENUE

N$

38 844 413

Other income

32 463

17 976 161
19 205 797

Operating costs

(30 734 168)

(24 422 215)

SURPLUS BEFORE INTEREST

8 142 708

12 759 743

Interest received

924 248

324 237

9 066 956

13 083 980

SURPLUS BEFORE TAXATION

Taxation

SURPLUS FOR THE YEAR

9 066 956

13 083 980

4 137 025

TOTAL COMPREHENSIVE SURPLUS FOR THE YEAR

Other comprehensive income

13 203 981

13 083 980

57

Statement Of Financial Position


as at 31 March 2013

Notes

2013

2012

N$

N$

ASSETS

NON-CURRENT ASSETS
Property, plant and equipment

7 526 406

3 709 435

CURRENT ASSETS

38 107 698

23 858 358

4 021 741

1 734 063

Bank balances and cash

34 085 957

22 124 295

TOTAL ASSETS

45 634 104

27 567 793

Trade and other receivables

RESERVES AND LIABILITIES



RESERVES

58

33 500 164

20 296 183

Revaluation reserve

4 137 025

Accumulated funds

29 363 139

20 296 183

NON-CURRENT LIABILITIES
Finance lease

10

CURRENT LIABILITIES

12 581

12 133 940

7 259 029

9 701 636

4 931 449

Trade and other payables

11

Finance lease

10

35 879

23 649

Trust funds - MME projects

12

2 396 425

2 303 931

45 634 104

27 567 793

TOTAL RESERVES AND LIABILITIES

Statement Of Changes In Reserves


for the Year Ended 31 March 2013


Revaluation Accumulated
Reserve
Funds

Total

N$ N$ N$

Balance at 31 April 2011

7 212 203

7 212 203

Surplus for the year

13 083 980

13 083 980

Balance at 31 March 2012

20 296 183

20 296 183

Surplus for the year

9 066 956

9 066 956

Other comprehensive income for the year

4 137 025

4 137 025

Balance at 31 March 2013

4 137 025

29 363 139

33 500 164

59

Statement Of Cash Flows


for the year ended 31 March 2013

Note

2013

2012

N$
CASH FLOWS FROM OPERATING ACTIVITIES

12 029 727

N$

13 920 702

Cash received from government and customers

36 556 735

37 073 916

Cash paid to suppliers and employees

(25 451 256)

(23 477 451)

Cash utilised by operations

11 105 479

13 596 465

Interest received

17

924 248

324 237

CASH FLOWS FROM INVESTING ACTIVITIES

(160 208)

(320 997)

Proceeds on property, plant and equipment

32 463

Acquisition of property, plant and equipment

(192 671)

(320 997)

CASH FLOWS FROM FINANCING ACTIVITIES

92 143

89 350

Increase in Trust Funds -MME Projects

92 494

89 350

Finance lease payments

(351)

60

Net increase/(decrease) in cash and cash equivalents

11 961 662

13 689 055

Cash and cash equivalents at the beginning of the year

22 124 295

8 435 240

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

34 085 957

22 124 295

Notes To The Annual Financial Statements


for the year ended 31 March 2013
1.

Basis of preparation

The annual financial statements are prepared on the historical cost basis, except for financial instruments which are
carried at fair value. The principal accounting policies, which have been consistently applied in all material respects,
comply in all material respects with International Financial Reporting Standards (IFRS) adopted by the International
Accounting Standard Board (IASB) and interpretations issued by the International Financial Reporting Interpretations
Committee (IFRIC) of the IASB.

2.

Standards, interpretations and amendments to published standards


that are not yet effective

The following table contains effective dates of new IFRSs and recently revised standards which have not been early
adopted by the Board and that might affect future financial periods:
New/Revised International Financial Reporting Standards and interpretations
IFRS 7

Effective Date

Financial Instruments: Disclosures - Amendments resulting from May 2012 1 January 2013
Annual Improvements to IFRSs

IFRS 7

Financial Instruments: Disclosures - Amendments enhancing disclosures 1 January 2015


about transfers of financial assets

IFRS 9

Financial Instruments - Classification and Measurement

IFRS 9

Financial Instruments - Financial Instruments: Accounting for financial 1 January 2015

1 January 2015

IFRS 10

Consolidated Financial Statements

1 January 2013

IFRS 11

Joint Arrangements

1 January 2013

liabilities and de-recognition

IFRS 12

Disclosure of Interests in Other Entities

1 January 2013

IFRS 13

Disclosure of Interests in Other Entities

1 January 2013

IFRS for SMEs

International Financial Reporting Standards for Small and Medium-sized 1 January 2013
Entities

IAS 1

Presentation of Financial Statements Amendments to revise Other 1 July 2013


comprehensive income

IAS 12

Income Taxes - Limited scope amendment (recovery of underlying assets)

IAS 19

Employee Benefits - Amended Standard resulting from the Post-Employment 1 January 2013

1 January 2013

IAS 27

Consolidated and separate Financial Statements - Reissued as IAS 27 1 January 2013

IAS 28

Investments in Associates - Reissued as IAS 28 Investment in Associates and 1 January 2013

IAS 32

Financial Instruments: Amended to application guidance on the offsetting of 1 January 2014

Benefits and Termination Benefits projects


Separate Financial Statements (as amended in 2012)
Joint Venture (as amended in 2012)
financial assets and financial liabilities
IFRIC 20

Stripping costs in the production phase of a surface mine

1 January 2013

The Board members anticipate that the adoption of these statements and interpretations will have no material impact
on the financial statements in future periods.

61

Notes To The Annual Financial Statements (continued)


for the year ended 31 March 2013
3.

Significant Accounting Policies

3.1 Revenue

Revenue comprises levies, licence and registration fees collected in terms of the Electricity Act No 2 of 2000 (repealed
by Electricity Act No 4 of 2007) to defray costs necessarily incurred by the Control Board and are recognised on an
accrual basis.

3.2

Property, plant and equipment

Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are
stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation,
less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are
performed with sufficient regularity such that the carrying amounts do not differ materially from those that would be
determined using fair values at the end of each reporting period.

Any revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive
income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset
previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the
decrease previously expensed. A decrease in the carrying amount arising on the revaluation of such land and buildings
is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve
relating to a previous revaluation of that asset.

62

Depreciation on revalued buildings is recognised in profit or loss. On the subsequent sale or retirement of a revalued
property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to
retained earnings.

Freehold land is not depreciated.

Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties
under construction) less their residual values over their useful lives, using the straight-line method. The estimated
useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets
are depreciated over the shorter of the lease term and their useful lives.

Depreciation is calculated on a straight-line basis to write off assets to their estimated residual values over their
anticipated useful lives as follows:

- Buildings

25 years (4% p.a.)

- Furniture and equipment

5 years (20% p.a.)

- Computer equipment

3 years (33.3% p.a.)

- Motor vehicles

4 years (25% p.a.)

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013
3.

Significant Accounting Policies (Continued)

3.3

Retirement benefits

Contributions to retirement funds are charged against income in the year in which they become payable.

3.4 Provisions

Provisions for liabilities are recognised when the Board has a present legal or constructive obligation as a result of past
events, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be
made of the amount of the obligation.

3.5

Impairment of assets

At each reporting date, the Board reviews the carrying amounts of its assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an
asset is estimated to be less than its carrying amount, its carrying amount is reduced to its recoverable amount and
the impairment losses are recognised as an expense immediately.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate
of its recoverable amount but limited to the carrying amount that would have been determined had no impairment
loss been recognised in prior years. A reversal of an impairment loss is recognised in the statement of comprehensive
income.

3.6

Cash and cash equivalents

Cash and cash equivalents are measured at fair value and comprise cash on hand, deposits held on call with banks and
investments in money market instruments, net of bank overdrafts and call loans. In the statement of financial position,
bank overdrafts are included in current liabilities. Interest-bearing bank overdrafts and other short-term borrowings are
recorded at the proceeds received, net of direct issue costs.

For the purpose of the statement of cash flows, the Board considers all bank balances and cash with a maturity of less
than one year and bank overdrafts to be cash and cash equivalents.

3.7

Financial instruments

Initial measurement

Financial assets and financial liabilities are recognised on the statement of financial position when the Board has
become a party to the contractual provisions of the instrument. Financial instruments carried on the statement of
financial position include bank and cash balances, trade and other receivables and trade and other payables.

63

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013
3.

Significant Accounting Policies (Continued)

3.7

Financial instruments (continued)

Subsequent measurement

Fair values and the recognition methods of the different financial instruments are disclosed in the notes to the annual
financial statements. Fair value represents an approximation of the year end value, which may differ from the value
that will be finally realised.

De-recognition

Financial instruments are offset when the Board has a legally enforceable right to offset and intends to settle either on
a net basis or to realise the asset and settle the liability simultaneously.

3.8

Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost
using effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in
the statement of comprehensive income when there is objective evidence that the asset is impaired. The allowance

64

recognised is measured as the difference between the assets carrying amount and the present value of estimated
future cash flows discounted at the effective interest rate computed at initial recognition.

3.9

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the
effective interest rate method.

3.10 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the rights and rewards
of ownership to the lessee. All other leases are classified as operating leases and rentals are charged against trading
profit as they become due.

The Board as a lessee

Assets held under finance lease are recognised as assets of the Board at fair value at the date of acquisition. The
corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.
Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets
acquired, are charged to the statement of comprehensive income over the term of the relevant lease so as to produce
a constant periodic rate of interest on the remaining balance of the obligations for each period.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant
lease.

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013
3.

Significant Accounting Policies (Continued)

3.11 Judgements by management


There were no material judgements made by management that could have a significant effect on the amounts
recognised in the financial statements.

3.12 Key sources of estimation uncertainty

There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date that could have a significant risk of causing material adjustment to the carrying amounts of the assets and
liabilities within the next financial year.

3.13 Trust Funds-Ministry of Mines and Energy Project


The Board undertakes a project on behalf of the Ministry of Mines and Energy (MME). The funds received are
accounted for as monies held in trust and all expenditure incurred on this project are accounted for separately from the
Boards transactions.

2013

4. Revenue

N$

N$

Revenue comprises the following:

- Levies income

- Licence fees

2012

38 226 913

17 414 661

617 500

561 500

38 844 413

17 976 161

65

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013

5.

66

2013

2012

N$

N$

Surplus / Deficit Before Taxation

Interest received

Insurance proceeds

Government grant

924 248

324 237

32 463

19 200 000

Loss on foreign exchange

(35 350)

(16 874)

Loss on disposal of fixed assets

(29 917)

Expenditure:

Auditors remuneration:
113 611

105 415

10 880

11 348
450 093

- audit fees - current year

- prior year

Depreciation

482 808

- land and buildings

110 909

97 119

- motor vehicles

190 341

190 341

102 444

100 993

79 114

61 640

16 078 282

14 057 874

- computer equipment

- furniture and equipment

Staff costs

Operating leases

- office equipment

6.

Board Members Emoluments

- service members

- other services

213 912

215 793

305 426

279 148

6 705

305 426

285 853

7. Taxation

The Board is exempt from income tax in terms of section 16(1) (e) (i) of the Namibian Income Tax Act.

8.

Property, Plant and Equipment

Land &

Motor

Computer

Furniture &

buildings

Vehicles

equipment

equipment

Total

N$ N$ N$ N$
N$

2013

Cost

At 01 April 2012

3 727 940

761 362

875 133

1 271 377

Disposals

Revaluation

423 055

166 876

589 931

4 137 025

4 137 025

Additions

At 31 March 2013

128 645

64 026

192 671

7 864 965

761 362

580 723

1 168 527

10 375 577

Accumulated depreciation

At 01 April 2012

Disposals

Depreciation

At 31 March 2013

2012

736 337

6 635 812

458 859

735 623

995 558

2 926 377

418 662

141 352

560 014

110 909

190 340

102 444

79 115

482 808

847 246

649 199

419 405

933 321

2 849 171

Net book value at 01 April 2012

2 991 603

302 502

139 510

275 819

3 709 435

Net book value at 31 March 2013

7 017 719

112 163

161 318

235 206

7 526 406

Cost

At 01 April 2011

3 727 940

761 362

770 487

1 055 026

6 314 815


Disposals

- - - - -

Additions

104 646

216 351

320 997

At 31 March 2012

3 727 940

761 362

875 133

1 271 377

6 635 812

Accumulated depreciation

At 01 April 2011


Disposals

Depreciation

At 31 March 2012

639 218

268 519

634 630

933 918

2 476 285

- - - - 97 119

190 340

100 993

61 640

450 092

736 337

458 859

735 623

995 558

2 926 377

Net book value at 01 April 2011

3 088 722

492 843

135 857

121 108

3 838 530

Net book value at 31 March 2012

2 991 603

302 502

139 510

275 819

3 709 435

Land and buildings comprises Erf 714, on 8 Bismarck Street, Windhoek.

67

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013

9.

2013

2012

N$

N$

Trade and Other Receivables

Trade receivables

4 025 407

1 617 477

Sundry debtors

38 001

84 154

Staff loans and advances

12 333

32 432

Provision for doubtful debt

(54 000)

4 021 741

1 734 063

Past due but not impaired

Past due for 1 30 days

Past due for 31 60 days

Past due for 61 90 days

Past due for more than 90 days

68

Movement in provision for doubtful debt

Balance at the beginning of the year

Increase in provision recognised in comprehensive income

Amounts written off during the year

54 000

54 000

(282 948)

54 000

282 948

54 000

Balance at the end of the year

The Boards main customer is Nampower, for which the credit terms are 30
days and no interest is charged on the trade receivable balance at year end.
The Board, therefore, believes that the trade receivables are not impaired and
the above provision for doubtful debt sufficiently covers the risk of default.

10. Finance Lease


At the reporting date, the Board had finance lease commitments under noncancellable finance lease for its office equipment, which fall due as follows;

Within one year

In the second to five years

35 879

23 649

12 581

35 879

36 230

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013

2013
N$

2012
N$

11. Trade and Other Payables



Trade creditors

Accruals

530 802

538 630

9 170 834

4 392 819

9 701 636

4 931 449

The average credit period on purchases of goods is 30 days and no interest is


charged on the trade payables balance as at year end. The Board has financial
risk management policies in place to ensure that all payables are paid within
the credit timeframe.

12. Trust Funds - Mme Projects



Balance at beginning of year

Funds received

2 303 931
92 821

2 214 581
95 847

Disbursements

(327)

(6 497)

Balance at end of year

2 396 425

2 303 931

MME Projects consist of various projects that are administered by the Board on behalf of the Ministry of Mines and
Energy. These funds form part of the bank and cash balance and are kept in a separate bank account.

69

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013

2013
N$

2012
N$

13. Retirement Benefits for Employees


Retirement benefits are provided for employees through an independent


retirement fund known as Namflex Pension Fund. The retirement fund is
governed by the Namibian Pension Funds Act and is a defined contribution
plan. All permanent employees qualify for the retirement benefits. Current
year contributions to retirement benefits amounted to N$ 1 245 977 (2012:
N$ 1 201 909).

The total value of contributions to the fund during the year amounted to:

Employee contributions

Employer contributions

409 329

396 650

836 648

805 259

1 245 977

1 201 909

According to Alexander Forbes, the fund was last valued as at 28 February


2012. They are currently busy with the new valuation and confirmed that the

70

financial position is sound.

14. Financial Instruments and Risk Management


14.1 Categories of financial instruments

Financial assets

Trade receivables

4 021 741

1 734 063

Bank balances and cash

34 085 957

22 124 295

Loans and receivables

38 107 698

23 858 358

Financial liabilities

Trade payables

9 737 515

4 967 679

Trust funds

2 396 425

2 303 931

Liabilities at amortised cost

12 133 940

7 271 610

14.2 Interest rate management


As part of the process of managing the Boards interest rate risk, interest rate characteristics of new borrowings and
the refinancing of existing borrowings are positioned according to expected movements in interest rates. The Board
currently has no exposure to interest rate risk as it does not have any interest bearing borrowings.

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013
14. Financial Instuments And Risk Management (Continued)
14.3 Credit risk management

The Board only deposits cash surpluses with major banks and investment houses of high quality credit standing.

The granting of credit is made on application and is approved by management. At year-end the Board did not consider
there to be any significant concentration of credit risk which has not been adequately provided for.

14.4 Liquidity risk management


The Board has minimised its liquidity risk by ensuring adequate facilities and reserve borrowing capacity.

14.5 Liquidity and interest risk tables


The table below summaries the Boards exposure to liquidity and interest rate risk:

2013

Average

1-3

3 months-

1-5

effective

months

1 year

years

Total

Interest rate

N$

N$

N$

N$

Financial Assets

Trade and other receivables

Bank balances and cash

0%

4 021 741

4 021 741

3.29%

34 085 957

34 085 957

38 107 698

38 107 698

9 737 515

Financial Liabilities

Trade and other payables

0%

9 737 515

Trust funds

0%

2 396 425

2 396 425

12 133 940

12 133 940

71

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013
14. Financial Instruments And Risk Management (Continued)
14.5 Liquidity and interest risk tables (Continued)
2012

Average

1-3

3 months-

1-5

effective

months

1 year

years

Interest rate
N$ N$ N$
N$

Financial Assets

Trade and other receivables

Bank balances and cash

0%

1 734 063

1 734 063

2.12%

22 124 295

22 124 295

23 858 358

23 858 358

Financial Liabilities

Trade and other payables

0%

4 931 449

4 931 449

Trust funds

0%

2 303 931

2 303 931

7 235 380

7 235 380

72

Total

Fair value

The directors are of the opinion that the book value of financial instruments approximates their fair value, as the items
are of a short-term nature.

14.6 Maturity profiles of the financial instruments


2013

Financial Assets

Trade and other receivables

Bank balances and cash

1-3

3 months -

1-5

months

1 year

years

N$

N$

Total

N$

N$

4 021 741

4 021 741

34 085 957

34 085 957

38 107 698

38 107 698

Financial Liabilities

Trade and other payables

9 737 515

Trust funds

2 396 425

2 396 425

12 133 940

12 133 940

9 737 515

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013
14. Financial Instruments And Risk Management (Continued)

14.6 Maturity profiles of the financial instruments (Continued)


2012

Financial Assets

Trade and other receivables

Bank balances and cash

1 734 063

1 734 063

22 124 295

22 124 295

23 858 358

23 858 358

Financial Liabilities

Trade and other payables

4 931 449

4 931 449

Trust funds

2 303 931

2 303 931

7 235 380

7 235 380

14.7 Capital risk management


The Board manages its capital to ensure that it will be able to continue as a going concern while maximising the return

73

to stakeholders by ensuring that economic value is added throughout. The capital structure consists of accumulated
funds and cash and cash equivalents.

14.8 Market risk management


The Boards activities expose it primarily to the financial risks of changes in interest rates. Refer note 14.2 for detail on
how the Board manages interest rate risk. There has been no change to the Boards exposure to market risks or the
manner in which it manages and measures risk.

15. Commitments

At the reporting date, the Board had outstanding lease


commitments under non-cancellable operating lease for
its office equipment, which fall due as follows;

Within one year

14 332

36 796

In the second to five years

42 997

124 720

57 329

161 516

The ECB Board approved the acquisition of a new building.


A committee is set up to spearhead the process, however
no purchase agreement is signed as at 31 March 2013.

Notes To The Annual Financial Statements (Continued)


for the year ended 31 March 2013

2013

2012

N$

N$

16. Related Parties


The Board regards RERA, Government and other parastatals as related parties. The following were the transactions
entered into during the year:

Regional Electricity Regulator of Southern Africa (RERA)

Subscription fees (membership)

National Energy Fund (Income)

(407 655)

(374 836)

19 200 000

(407 655)

18 825 164

Compensation of key management personnel

Short-term benefits

Post-employment

74

4 849 913

4 136 534

444 364

389 158

5 294 277

4 525 692

17. Reconciliation of Surplus Before Taxation to Cash Utilised by


Operations

Surplus before taxation

Adjusted for:

9 066 956

Loss / (Profit) on disposal of fixed assets

13 083 980

29 917

Depreciation

482 808

Insurance proceeds

(32 463)

Interest received

(924 248)

(324 237)

8 622 970

13 209 835

Working capital changes

Increase in trade and other receivables

Increase/(decrease) in trade and other payables

CASH UTILISED BY OPERATIONS

450 092

2 482 509

(386 630)

(2 287 678)

(108 041)

4 770 187

494 671

11 105 479

13 596 465

Detailed Statement Of Comprehensive Income


for the year ended 31 March 2013

2013

2012

N$ N$


INCOME
Levies received

38 226 913

17 414 661

Licence fees

617 500

561 500

Interest received

924 248

324 237

Other income

32 463

19 205 797

TOTAL INCOME

39 801 124

37 506 195

Advertising

371 018

475 797

Audit fees- current year

EXPENDITURE
113 611

105 415

- prior year

10 880

11 348

Provision for doubtful debt

54 000

Bank charges

34 063

34 645

Computer expenses

116 310

47 822

Computer software expenses

149 783

92 381

Conference and seminar expenses

451 003

130 339

Depreciation

482 808

450 092

Members fees

305 426

285 853

Donations

119 932

148 532

Entertainment

243 040

176 328

35 350

16 874

Foreign exchange losses


Insurance
Legal and professional fees

122 938

121 065

1 065 916

785 554

Licences and permits

1 728

2 193

Light, heat and water

173 395

148 382

Loss on disposal of fixed assets

29 917

Maintenance

53 184

125 350

100 382

90 225

57 528

38 655

Office expenses
Penalties
Postage and couriers
Printing and stationary
Project costs
Recruitment and staff training
Reference and resource material
Rent equipment
Salaries and other staff costs
Security services

4 424

9 090

383 865

238 710

5 732 481

2 162 942

613 304

892 863

16 055

213 912

215 793

16 078 282

14 057 874

110 629

100 441

75

Detailed Statement Of Comprehensive Income


for the year ended 31 March 2013 (Continued)
Subscriptions
Subsistence and travelling staff members

Board members

Telephone and fax


Vehicle expenses

531 301
2 533 431

84 918

82 046

270 023

210 349

150 155

100 525

30 734 168

24 422 215

SURLPUS FOR THE YEAR

9 066 956

13 083 980

Other comprehensive income

4 137 025

13 203 981

13 083 980

TOTAL EXPENDITURE

TOTAL COMPREHENSIVE SURPLUS FOR THE YEAR

76

470 318
2 513 590