Signature Project - 
Namibia Independent Power Producer Regulatory Framework

Project Background.  Starting in 2004, the entire Southern African Region began to suffer from a serious power shortage beginning with South Africa, the exporter of power to many countries in the Region, facing a shortfall of over 6,000 MW (15% of its installed capacity).  Namibia, a net importer of power, faced an energy crisis that affected its industry, rural population, and the overall economy.  The shortage of power also adversely affected Namibia’s trade with its neighbors. The Government began a multi-pronged program to enhance its capacity to encourage private sector investment in the power sector and improve its trade capacity for regional trade. 

CORE International's Work
Under a grant from the U.S. Trade and Development Agency, the Electricity Control Board (ECB) of Namibia, the regulator, selected CORE International, Inc. to develop a market framework and the necessary regulatory instruments to promote private power investment and address the ability for Namibia to increase its trade capacity with its neighbors, especially South Africa.  As part of this 3-year, two-phase assignment, CORE conducted an assessment of the power market and trade opportunities for Namibia. 

Activities and Results
Based on the assessment, under Phase I, the CORE Team developed the following specific regulatory interventions:

  • Developed a market model to assess the regional market for power and the capacity for Namibia to be a strong trading partner in the entire Southern African Region
  • Developed a tariff model to bring power tariffs to full cost reflectivity, an important requirement of private investors and trained officials from the ministry, the regulator, and electricity service providers
  • Developed a regulatory process and a model to assess the impacts of tariff reform and implementation of the cross-border trade model on the various producing and consuming sectors of the economy
  • Developed a “light-handed” regulation to encourage small and micro-enterprises to make investments in rural communities for economic development and poverty alleviation
  • Developed model templates for licenses, power purchase agreement (PPAs), negotiations guidelines, and evaluation of private sector investment projects by the Government
  • Developed a framework for the unbundling of electricity distribution service to three independent commercial companies operating with commercial efficiency and improving the service to consumers across the country
  • Conducted considerable capacity building and training of stakeholders in the use of the models and templates
 
The objective of the follow-on Technical Assistance (TA) (Phase II) to the ECB was for the ECB to begin the process of implementing various types of IPPs and to build the ECB’s staff and management capacity in the implementation of various regulatory functions needed to issue licenses to various IPPs and conduct due diligence of IPP proposals in accordance with best international practices and the framework and model approaches developed by CORE. Namibia IPP and Investment Market Framework Development. 
 
Specifically the objectives of the proposed TA were as follows:

  • Application of IPP Framework to Specific IPP Projects
  • Review of 14 Applications for Licenses from Private Entrepreneurs – 2 10 MW wind power projects, 3 biomass-based power projects, 2 Solar (CSP) projects, and 1 hydropower project
  • Technical Assistance to the ECB in Mobilizing the Development of an Integrated Resource Plan and a Distribution Code
  • Capacity Building of the ECB and Other Energy Sector Stakeholders in Transparent and Accountable Implementation of an IPP Regime in Namibia