SOURCE: Frost & Sullivan

March 15, 2011 01:30 ET

Rising Demand from Mining Industry to Boost Namibian Electricity Industry, Finds Frost & Sullivan

CAPE TOWN, SOUTH AFRICA--(Marketwire - March 15, 2011) - Growth in the Namibian electricity market will be driven by the expansion of the mining industry, particularly that of uranium. This will be buttressed by increasing demand for electricity across other industrial sectors.

New analysis from Frost & Sullivan (http://www.energy.frost.com), 2010 Updated Overview of the Namibian Electricity Industry, finds that the industry generated $222.0 million in 2009 and estimates this to reach $790.4 million in 2014. The following segments are covered in the research: power generation, electricity transmission, electricity distribution and others (equipment suppliers, end users and financiers).

The mining industry is the major end user of electricity in Namibia. Electricity demand from the mining industry is set to grow by approximately three per cent per annum due to augmented investments in the mining sector.

"The rapid growth in uranium production will help it surpass the diamond sector as the largest foreign currency earner in the mining industry between 2015 and 2020," notes Frost & Sullivan Energy and Power Systems Research Analyst Sandra Ayingono. "The opening of several uranium mines in the Erongo region will augment demand for electricity by 300MW, by 2012."

The heighted need for electricity in the mining and tourism industries contributed to the significant rise in overall electricity demand from 2008 to 2009. The total electricity demand in the country rose by four per cent over the last three years, with this trend of high growth set to remain for the long term.

However, overloading of transmission lines and the rising cost of electricity imports are posing major challenges to the development of the Namibian electricity industry. South Africa has been Namibia's major energy partner, accounting for an average of half of Namibia's electricity supply over the last three years. As electricity tariffs increased substantially in South Africa, electricity imports to Namibia have also risen.

At the same time, higher electricity imports from other Southern African Power Pool (SAPP) members have led to overloaded transmission lines in some areas.

"Promisingly, the Namibian government and NamPower are increasingly encouraging and creating an environment conducive to external investment," assures Ayingono. "There is an increasingly significant market for OEMs, given the number of projects that are in the pipeline."

The design and implementation of an independent power producers (IPPs) framework represents a step towards the liberalisation of the sector. Accordingly, more IPPs are expected to express interest in the Namibian electricity industry.

"In order to achieve cost reflectivity, electricity tariffs are expected to significantly increase by 2010," concludes Ayingono. "This will allow the industry to maintain and expand generation, transmission and distribution infrastructure."

2010 Updated Overview of the Namibian Electricity Industry is part of the Energy & Power Growth Partnership Service programme, which also includes research in the following markets: The Southern African Oil and Gas Market and Asian Influence in the Sub-Saharan African Electricity Market. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

If you are interested in more information on this study, please send an e-mail to Christie Cronje, Corporate Communications, at christie.cronje@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country.

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2010 Updated Overview of the Namibian Electricity Industry
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