Namibia's Kudu gas project still on track

2014-11-25 14:28
Electricity pylons. (Nardus Engelbrecht, Sapa)

Electricity pylons. (Nardus Engelbrecht, Sapa)

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Windhoek - Namibia's 885MW Kudu gas-to-power project is still on track with a final investment decision expected by June 2015, the mines and energy ministry said.

Despite objections by an energy lobby group against the generation licence application by the government power utility NamPower for its subsidiary Kudu Power and British company Tullow Oil pulling out as project partner last month, Kudu would go ahead.

"It is a national project and will achieve Namibia's aim of self-sufficiency of power supply", Erastus Kahuure, permanent secretary in the ministry, told a press conference.

"We are aware it is a complex project on the upstream and downstream side and Tullow's pull-out will not impact project development timelines", Kahuure added.

Other investors were interested in filling the gap left by Tullow, the government official noted without disclosing names.

"Zambia's independent CEC Energy company will buy 300MW and the power export agreements' term sheets were provided to South Africa's national power utility Eskom as second off taker", said NamPower's managing director Paulinus Shilamba at the press conference.

Last week, Leake Hangala, Shilamba's predecessor at NamPower publicly questioned the economic viability of the $2.6bn mega project.

"We must ask as business people and as taxpayers if the Kudu gas project is economically viable", Hangala told the national energy forum hosted by the Namibia chamber of commerce and industry (NCCI).

Similarly a newly emerging Consumer Advocacy for Energy (CAE) group officially objected to NamPower's electricity generation licence application at the Electricity Control Board (ECB), citing "fears of monopoly and electricity tariffs becoming unaffordable for consumers".

Last month the ECB informed NamPower to re-apply for the licence with more information to be contained therein.

Tullow's withdrawal from the upstream part of the project, bringing the gas to shore from the ocean bed 140km off Namibia's coast was due to its wish to concentrate on other oil and gas projects.

The Kudu gas field was discovered around 1970 by Shell. It has proven reserves of 1.3 trillion cubic feet.

The upstream part of the project costs around $1.3bn.

Construction of the Kudu power station near Oranjemund along the southern coast of Namibia will cost around another $1.3bn.

Read more on:    namibia  |  energy

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