March 6, 2002

Electricity distribution issue in the North not yet resolved

A feud between government agencies over electricity distribution entered a new chapter yesterday when the Electricity Control Board (ECB) told Nored to take over Northern Electricity as a going concern.

Nored, a company jointly owned by NamPower, eight regional councils and seven municipalities, takes over power distribution from Northern Electricity, a private company, at midnight on March 12.

Electricity Control Board chairperson Klaus Dierks said that the ECB had been unwilling to grant a licence to Nored, but was effectively forced to do so by the Ministry of Regional and Local Government and Housing.

The ECB has said Nored did not have enough technical expertise or financial resources to manage the contract.

However, the Ministry, which has retained the physical distribution facilities, have announced they would only let these assets be used by Nored and not by Northern Electricity. It is understood that the Ministry favours Nored because it has the involvement of local councils.

The permanent secretary and other senior officials could not be traced for comment yesterday, however.

In such circumstances, the ECB felt it had no choice but to grant the licence to Nored, but are still worried about what would transpire.

"I get butterflies in my stomach when I think what may happen next week," said Dierks.

After one year the licence will be reviewed subject to Nored's performance. Nored has been forced to take over Northern Electricity "as an operating entity or else appoint them as operators."

Chief Executive of the ECB, Siseho Simasiku, said that under the new Electricity Act, regional electricity distributing companies would have to be set up in all areas of the country. He said he hoped this could include more private sector involvement, and allow for more competition for Nampower. He said he felt the private sector was not sufficiently represented in the Nored arrangement.

Nored's deputy chairperson Imker Hoogenhout, who is also a senior manager at NamPower, said it was unfair that a company be given a licence and then told how it must conduct its business.

He thought such conditions exceeded the ECB's mandate. He said the regional electricity distributors would, under the new law, have to be "asset based", and therefore a company like Northern Electricity, which did not own the assets themselves, would not be feasible. He said it was "nonsense" that Nored did not have the financial resources to do the job.

He admitted they did not have staff, but said the ECB was partly to blame for this, by announcing the new licence so close to the end of Northern Electricity's contract.

Hoogenhout said it was unlikely that Nored could take over the entire Northern Electricity business by March 12, but transitional arrangements would be made to "ensure the lights do not go out."

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