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Nored justifies the proposed 7.7% increase

KATIMA MULILO – Katima Mulilo residents and senior politicians have questioned the rationale behind the 7% tariff increase proposed by the Northern Regional Electricity Distributor.

According to them, such an adjustment is harsh in the face of unfavorable economic conditions.

They expressed their dismay during a consultative meeting organized by Nored and the Namibia Electricity Control Board (ECB) in Katima Mulilo this week.

The objective of the meeting was to evaluate consumer opinions on the 7.7% electricity rate increase proposed by Nored.

More than a month ago, Namibia Power Corporation (NamPower) asked the ECB for a 14.59% increase in electricity tariffs for the 2024/25 financial year.

The proposed increase would raise customers’ average transmission rate from 198.56 c/kWh to 227.53 c/kWh.

This adjustment changes the average rate from the current approved tariff from N$1.9856 to N$2.1444 per kilowatt hour (kWh) for 2024/2025.

By 2025/26, the ECB expects an average bulk tariff of N$2.4512, by 2026/27 it will increase to N$2.6733, by 2027/28 to N$2.7747 and by 2028/29 at N$2.9066.

The proposed combined rates, on average, include residential, social, general, general demand, institutional, institutional demand and special flat, which is general and institutional prepaid.

Taking into account massive tariff adjustments, the ECB last month urged distribution licensees, including regional councils, local authorities, large industrial transmission customers and regional electricity distributors (REDs), to apply for tariff improvements.

Nored acting CEO Toivo Shovaleka defended the tariff application, stating that the 7.7% overall tariff increase requested from the ECB for approval is below the increase announced by NamPower’s 8% tariff adjustment .

“We can request an average tariff increase of 7.7%. We are not even equaling 8% of the national electricity supply. “We believe that 7.7% will be reasonable to ensure business continuity and be able to serve you as end users,” he stated.

Although the session was poorly attended, Katima Mulilo residents present opposed the proposed increase.

“Do you think the proposed increase is realistic, taking into account other factors and inflation rates? Do you also believe that the classifications are done fairly (e.g. institutions, companies and national categories)? Don’t you think it’s necessary to reconsider this? asked unhappy resident Jacob Mahunga.

Kabbe South constituency councilor John Likando also attended.

“I’m a little bit worried. We believe that Nored’s restructuring could also be a problem it is in. I’m pushing to solve all these problems. We need the electricity supply industry conference. You need light to see and cook. It only happened once, when the ECB cut rates about five years ago.

The biggest challenge is to review the process that Nored started with and hopefully it can also be applied to tariff reduction. We need to harmonize these rates to serve citizens,” Likando stressed.

Judea Lyaboloma constituency councilor Humphry Divai is hopeful that the public’s views will be taken into account.

“In fact, our people are already suffering from the huge increase in essential commodities, and now the 7.7% increase by Nored will increase people’s poverty. The ECB must take into account that our people are already suffering and we cannot reach a 7.7% increase,” he reasoned.

Another resident, Percy Mashebe, asked what prospects Nored has in terms of infrastructure development for Katima Mulilo, which will translate into short-term employment opportunities for them.

The acting CEO quickly responded that last week an advertisement about a project between Nored and the European Union Bank on electrification projects from Zambezi to the Kunene region appeared in local newspapers.

“It will provide local employment. We will invite you to express your interest. Those are some of the perspectives,” Shovaleka said.

In addition, the head of economic and market regulation at the ECB, Pinehas Mutota, stated that the regulatory body will investigate the reasons given by Nored in its application of the 7.7% rate.

One of the reasons given by Nored includes the fact that NamPower also increased its tariff by 8%.

“It is up to us to take note of their concerns and then we will review the application of Nored’s proposed tariff,” he said.

The public has until May 31, 2024 to submit written submissions before the ECB completes the review process.

The next sessions on the proposed tariff implementation will be held in Rundu, Oshakati, Ondangwa, Opuwo, Otjiwarongo, Swakopmund and Keetmanshoop before heading to Windhoek.

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