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Nampower Raises Plant Size as Tullow Accord Seen by December

Aug. 12 (Bloomberg) -- Namibia Power Corp. said it raised the capacity for its planned gas-fired electricity plant and plans to sign a sales accord by December with Tullow Oil Plc, which is developing the Kudu fields that will fuel the facility.

The state-owned utility’s power plant, which will use gas from the Kudu fields about 200 kilometers (124 miles) off the southern town of Oranjemund, will have capacity of as much as 1,050 megawatts and will cost $1.3 billion to build, Managing Director Paulinus Shilamba said by phone on Aug. 7 from the capital, Windhoek. That compares with the previous plan for 800 megawatts at a cost of $1.2 billion.

“We have agreed on the basic principles of the gas-sales agreement and details on the price range and other issues are still being negotiated,” Shilamba said. “The equipment available today to generate around 800 megawatts falls in the range 850 to 1,050 megawatts.”

Nampower owns 51 percent of the Kudu plant while Zambia’s Copperbelt Energy Corp. has a 30 percent equity stake. The remaining shareholding is up for sale. The utility, which last year suffered a 21 percent decline in output from its Ruacana hydropower plant because of dry weather, is a net electricity importer and says supplies will remain critical until Kudu comes on the grid in the first quarter of 2018.

Tullow owns 31 percent of the Kudu gas fields, which holds about 1 trillion cubic feet of gas resources, and is operating them. Japan’s Itochu Corp. also has a stake.

Namcor Sale

National Petroleum Corp., the state-owned oil company known as Namcor, owns 54 percent of the fields and plans to reduce this to about 16 percent, Managing Director Obeth Kandjoze said in September.

Nampower will be the sole buyer of gas pumped from the Kudu fields and has first right of refusal if there is additional gas, Shilamba said.

“We may also look at plant upgrades to raise generation capacity if Tullow discovers more gas in this license area,” he said.

The utility is seeking to sell a bond in the country and neighboring South Africa early next year to raise cash for transmission projects and its share of capital in the Kudu plant, Chief Financial Officer Hanri Jacobs said on July 7.

Namibia, which produces the world’s highest-quality diamonds from the floor of the Atlantic Ocean and is the fifth-largest uranium producer, imports more than 53 percent of its electricity requirements from South Africa, Nampower said in its 2012 annual report. Nampower had installed capacity of 1,087 megawatts on June 30 last year, compared with 1,099 megawatts a year earlier, according to its 2013 annual report posted on its website.

The utility’s board will meet at the end of this month to decide on the winning bidder from 15 shortlisted contractors for the Kudu plant, Shilamba said.

“Evaluation is being finalized now and the board will decide on preferred bidder,” he said. “We also expect that final investment decision and all agreements to be signed by December.”

To contact the reporter on this story: Felix Njini in Windhoek at fnjini@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Ana Monteiro, Indranil Ghosh

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