2015

ANNUAL REPORT

ELECT

RICIT

Y C

ON

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L BOA

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L REPORT

2015

VISION“To be recognised as a leading regulator for achieving optimum viability and competition in

the Namibian energy industry.”

MISSION“To regulate and control the Namibian Electricity Supply Industry in the interest of all

stakeholders with regard to price, quality and reliability.”

CORE VALUES

ProfessionalismTo conduct every task to a standard of excellence and maintain the highest level of

technical competence and personal integrity/efficiency so as to ensure the satisfaction of all stakeholders.

IntegrityTo be accountable and act in accordance with government policy and accept full

responsibility for all outcomes; to be transparent, open, honest and fair in all dealings and communications with stakeholders.

InnovationTo innovate through learning, teamwork and knowledge sharing in order to remain

competitive in the market and to continue to deliver excellent service.

SustainabilityTo ensure the endowment of Namibia’s energy resources are available to present and

future generations by considering our economic, environmental and social responsibility.

Vision, Mission Statements and Corporate Values

2

Vision, Mission Statement and Corporate Values 1

Abbreviations/Acronyms 6

Board Members 7

ECB Management 8

Board Chairperson’s Report 9

Chief Executive Officer’s Report 10

1.1 Corporate Governance 1.1.1 Governance and Performance Agreements 12 1.1.2 Codes of Practice and Conduct 12 1.1.3 Appointment and Information about the Board Members 12 1.1.4 Constitution of Board Committee 14

1.2 Legislative Mandate 1.2.1 Future Legislative Reforms 14 1.2.2 Legal Instruments 14 1.2.3 Legal Projects 16 1.3 Human Capital Management 1.3.1 Appointments 16 1.3.2 Promotions 16 1.3.3 Staff Turnover 17 1.3.4 Training & Development 18 1.3.5 Employee Wellness 19 1.4 Public Relations & Stakeholder Management 1.4.1 Public Relations 19 1.4.2 Stakeholder Management 19 1.4.3 Public Awareness and Sensitisation 19 1.4.4 Impact of Stakeholder Engagement and Public Awareness Initiatives 19 1.4.5 Corporate Social Responsibility 20 1.4.6 Future Outlook 20

1.5 Information Technology (IT) 1.5.1 Activities Carried out 20 1.5.2 Future Outlook 20

2. Economic Regulation 2.1 Tariff Setting and Methodology 22 2.2 Approved Tariffs 22 2.3 Cost Reflectivity of Tariffs 25 2.4 Local Authority Surcharge 25 2.5 Modified Single Buyer Model 26 2.6 Economic Regulation Projects 26 2.7 Economic Regulatory Tools 27 2.8 Future Outlook 28

Table of Contents

3

3. Technical Regulation 3.1 Quality of Supply Standards 28 3.2 Quality of Service Standards 29 3.3 Demand Side Management and Energy Efficiency 29 3.4 Technical Regulation Projects 29 3.5 Technical Regulatory Tools 32 3.6 Future Outlook 32

4. Regulatory Support Services 4.1 Licensing Status and Update 33 4.2 Licensing Compliance 36 4.3 Compliance Audits Conducted 37 4.4 License Complaints 37 4.5 ESI Capacity Building 37 4.6 Regulatory Support Service Projects 37 4.7 Future Outlook 40

5. Industrial Analysis 5.1 Electricity Sector Performance Results 40 5.2 Key ESI Statistics 43

6. Regional and International Activities 6.1 Regional Electricity Association of Southern Africa (RERA) Activities 48 6.2 African Forum for Utility Regulators (AFUR) 48 6.3 International Electrotechnical Commission (IEC) and the African Electrotechnical Standardization Commission (AFSEC) 48 6.4 World Enengy Council (WEC) 48

7. Overview of ECB Performance 49

8. Annual Financial Statements 54

4

Tables

Table 1: Board Members 13

Table 2: Board Meetings 13

Table 3: Board Committees 14

Table 4: Legal Instruments 15

Table 5: Selection of Training Interventions, Workshops and Seminars attended 19

Table 6: Statistics on Quality of Supply Logger Placement 28

Table 7: List of Licensed Independent Power Producers 34-35

Table 8: List of Customer Complaints Reported 37

Table 9: Performance of REDs 41

Table 10: Performance of Distribution Companies Outside RED Area 42

Figures

Figure 1: Filled vs Vacant Positions 17

Figure 2: Gender Distribution 18

Figure 3: Wholesale Electricity Price Path 23

Figure 4: Share of energy sources (GWh and percentage) 23

Figure 5: Percentage share of Local Generation vs Import - Energy 24

Figure 6: Impact of Imports and Electricity Tariffs in Namibia - Energy Cost Component 24

Figure 7: Impact of Imports on Electricity Tariffs in Namibia - Average Generation Tariff 24

Figure 8: Electricity Sector Value Chain 41

Figure 9: Namibian Electricity Generation vs Demand 43

Figure 10: Units into the System and Units Consumed 43

Figure 11: NamPower Losses 44

Figure 12: Retail Tariffs Increase Over Time 44

Figure 13: Average Annual Tariffs Per Customer Category 45

Figure 14: Total Number of Customers Per Customer Category 45

Figure 15: Total Electricity Consumption 46

Figure 16: Total Electricity Revenue from Customers 46

5

Abbreviations/Acronyms

6

AFSEC African Electrotechnical Standardisation Commission

AFUR African Forum for Utility Regulators

CEO Chief Executive Officer

CFL Compact Fluorescent Lamp

CSP Concentrated Solar Power (Solar Thermal)

DSM Demand Side Management

DSMEE Demand Side Management and Energy Efficiency

ECB Electricity Control Board

EDI Electricity Distribution Industry

EIA Environmental Impact Assessment

ELECTRICITY ACT Electricity Act 2007 (Act No. 4 of 2007)

ER Economic Regulation

ERP Enterprise Resource Planning

ESI Electricity Supply Industry

Gx Generation

HR Human Resources

IPP Independent Power Producer

IEC International Electrotechnical Commission

IT Information Technology

LA Local Authority

LAS Local Authority Surcharge

LRMC Long Run Marginal Cost

M&V Measurement and Verification

MME Ministry of Mines and Energy

MRLGHRD Ministry of Regional and Local Government, Housing and Rural Development

MURD Ministry of Urban and Rural Development

NIRP National Integrated Resource Plan

NQA Namibia Qualifications Authority

NTA Namibia Training Authority

PPA Power Purchase Agreement

RC Regional Council

RED Regional Electricity Distributor

RERA Regional Electricity Regulators Association

RET Renewable Energy Technology

RSS Regulatory Support Services

SOE Act State-Owned Enterprises Governance Act (Act No. 2 of 2006)

SWH Solar Water Heater

TRD Technical Regulation Department

Tx Transmission

WEC World Energy Council

Board Members

7

Mr. Gottlieb Hinda Mr. Fritz Jeske Mr. Gerson Katjimune

Mr. Jason NandagoChairperson

Ms. Panduleni N. ShimutwikeniDeputy Chairperson

8

ECB Management

Mrs. Foibe L. NameneCEO

Mr. Rojas ManyameGeneral Manager Regulation

Ms. Mara UazengaGeneral Manager Finance and

Administration

Mr. Johann MalanManager Corporate

Communications and Legal Services

Mr. Kenneth !GaosebManager Human Resources

Mr. Pinehas MutotaManager Economic Regulation

Dr. Maxwell MuyamboManager Technical Regulation

Mr. Francois RobinsonManager Regulatory

Support Services

Ms. Rachel BooisManager Finance

9

Board Chairperson’s Report

“The future outlook is to ensure the completion of the EDI restructuring process.”

In the year under review, the corporate outlook of

electricity regulation in Namibia and the SADC region was

characterised by increasing consumer pressure to shift the

focus from exclusive utility sustainability to

consumer protection. In this regard, the ECB continuously

revised and updated its procedures and processes, among

which included the revision of the tariff methodology and

other regulatory instruments to ensure best practices in

the industry. The restructuring of the Namibian energy

sector, particularly the revision of its energy regulatory

framework, has reached an advanced stage and the

supporting legislative pieces have been drafted.

To ensure the optimisation of the electricity generation

resources mix, the ECB proposed a review of the National

Integrated Resource Plan (NIRP). The rationale is to

ensure that electricity infrastructure investments are

done in a coordinated manner and in line with the NIRP.

The private sector will have a role to play in contributing

to the energy mix. The energy mix for Namibia comprises

both the traditional fuel base and renewable energy such

as solar, wind, bio-fuels etc.

The EDI restructuring process is ongoing. This will ad-

dress the issue of service delivery and quality of supply,

especially in those areas falling outside established REDs.

To date, networks in many municipalities are in a poor

state, with substantial investment required to maintain

and rehabilitate these assets. The upgrade and

maintenance of distribution networks will be done in

accordance with an asset management strategy,

sufficient investment in planned and existing networks,

and the coordination of efforts to address national

distribution issues.

Going forward, the ECB will work on its transformation

into a multi sectoral energy regulatory body. The

transformed ECB will regulate downstream gas,

petroleum pipelines and renewable energy, in addition to

electricity. This transformation will be facilitated by

relevant bills developed by the ECB, which are awaiting

final approval. In the meantime, the ECB will remain

focused on undertaking sustainable regulatory

interventions to the benefit of its stakeholders.

10

Chief Executive Officer’s ReportThe country’s electricity industry has undergone various

changes in attempting to address specific goals set in its

energy policy, the White Paper on Energy Policy of 1998.

The industry has since been split in separate license

entities responsible for different sectors of the industry,

such as generation, transmission and distribution and

trading. While generation, transmission and trading

sections are still operated by the national utility

NamPower, the ECB believes that a monopoly is not

sustainable. Efforts are therefore ongoing to finalise and

implement the Modified Single Buyer Market Structure.

In addition to generation, an Independent Power Producer

(IPP) Investment Framework has been developed by the

Regulator to encourage IPP participation in the industry.

Apart from the fact that a number of licenses have been

issued in accordance with the IPP Framework the issue of

risk allocation between the IPPs and the off-taker remains

a stumbling block in the realisation of the licenced IPPs.

Lack of IPPs and other local generation capacity coming

into operation has perpetuated the country’s reliance on

electricity imports of up to 60% at times. This is a serious

risk and an impediment to the achievement of the

country’s development goals.

During the reporting year, the ECB performed regulatory

oversight over the Omburu Power Purchase Agreement

for a 4.5MW solar PV power plant near Omaruru.

Construction commenced in 2014 and should be

completed early in the new financial year. This is the first

renewable energy generating plant in Namibia procured

on an IPP basis.

The ECB, in conjunction with NamPower and the Ministry

of Mines and Energy, commenced with the interim REFIT

Programme, with 27 IPPs comprising solar PV, CSP,

biomass and wind-being invited to tender for 70MW

of renewal energy to be added to the national grid. The

capacity of each IPP under the programme is limited to

5MW and NamPower will be the off taker under the

power purchase agreements. The ECB approved

Renewable Energy Feed-In Tariffs (REFIT) for the

Programme. The deadline for financial close for the

Programme is 15 June 2016.

In a further development, NamPower, NEI, MME and the

ECB completed bid documents for a 3x10MW solar PV

tender. The tender will be issued in June 2015. The closing

date will be in the third quarter of the next

financial year.

The successful implementation of these programmes

would substantially increase the uptake of renewable en-

ergy into the generation mix as well as the involvement of

the private sector in generation.

The distribution industry is partially restructured. In some

areas, local authorities and other previous distributors

have been combined into Regional Electricity

Distributor utilities or REDs as they are commonly known.

This arrangement has realised benefits such as economies

of scale, equal regional focus (expertise and manpower),

harmonised tariffs, improved quality of supply and

services, customer focus and many more. The

restructuring however, brought with it some challenges

such as the reduced ability of the local authorities to

11

generate a surplus from electricity sales, since electricity

was and is used to subsidise other non-revenue

generating services. It is therefore imperative that a

solution on the funding and revenue of local authorities

be found.

Finally, Government at independence in 1990 identified

rural electrification as a priority, with the extension of the

grid to rural areas, enabling the connected communities

to participate in the mainstream economy and

accelerate the achievement of set socio-economic

development targets.

In order to improve access to electricity in urban and rural

areas the Regulator is developed a National

Support Mechanism that will enable electricity

distribution licensees to systematically improve access to

electricity in their areas of responsibility. The mechanism

is intended to complement the current rural electrification

efforts and deal specifically with urban areas that do not

have access to electricity.

Finally, electricity prices are expected to continue to

increase in the foreseeable future, due to increasing costs

of supply. Escalating prices are particularly felt by those

who scarcely make ends meet. It is important that

electricity remains affordable, to ensure the country’s

ongoing development and to protect low income

households. To this end, the ECB together with the

Ministry of Mines and Energy has developed a Support

Mechanism devised to make electricity more afford-

able for low electricity consuming households. The draft

mechanism is submitted to the Cabinet Committee on

Trade and Economic Development (CCTED) for

endorsement before submission to Cabinet for approval.

It is therefore important that efforts are focussed on

making a success of this noble idea. A vibrant and

stable electricity industry is a pre-requisite for a

developing economy, as society, businesses, industries

and manufacturers are dependent on it for growth.

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Corporate Information and Development

1.1 Corporate Governance

Introduction The ECB is committed to complying with the principles

of good corporate governance and applicable legislation;

most notably the Electricity Act and the State-Owned

Enterprises Governance (SOE) Act. In its quest to adhere

to best practices and sound governance principles, the

ECB is continuously evaluating itself and its effectiveness

through appropriate mechanisms.

Board members are required by the Electricity Act to

disclose any private interests they may have in matters

that are under consideration by the Board and to withdraw

from any discussion thereof. In addition, board members

are required to disclose their interest on matters that are

decided on a round robin basis.

Complementary to the instruments above, the ECB is

investigating the potential application of the Corporate

Governance Code for Namibia and its guidance on best

practice principles.

1.1.1 Governance and Performance Agreements

In line with sections 17 and 18 of the SOE Act, the ECB

has prepared a governance agreement to be concluded

between the portfolio Minister and the Board in relation to

the issues stipulated in the above-mentioned section 17,

and prepared performance agreements to be concluded

between the portfolio Minister and individual Board

members as anticipated in section 18. These agreements

are subject to approval by the Board, the line Ministry and

the SOE Governance Council.

As the term of the current Board is expiring in December

2015, these agreements will be presented to the new

Board once constituted. Key performance indicators will

ensure that performance of the Board is measured against

set targets, in line with the Strategic Plan of the ECB.

1.1.2 Codes of Practice and ConductIn 2010, the ECB established a Board Charter. The Board

Charter provides guidance to Board and Board Committee

members on the conduct required of them in the execution

of their duties. The Board Charter covers key aspects

such as the roles and responsibilities and duties of the

Board members, the composition of the Board and Board

committees, procedural matters regarding Board and

committee meetings, delegations, disclosure of interest

and annual performance evaluations. The Board Charter

is currently under review in order to ensure that it takes

cognisance of developments in this area.

1.1.3 Appointment and Information about the Board MembersBelow is a table indicating the appointment dates and

current terms of the Board Members:

Table 1: Board Members

Board Member Status Date of First

Appointment

Date of Current

Appointment

Current Term

Mr Jason Nandago Chair 15 March 2000 14 December 2011 4 years

Ms Panduleni N. Shimutwikeni Deputy Chair 14 December 2007 14 December 2011 4 years

Ms Foibe L. Namene Ex-officio member* 1 June 2014 1 June 2014 5 Years

Mr Gottlieb Hinda Member 17 March 2011 14 December 2011 4 years

Mr Fritz Jeske Member 4 November 2002 14 December 2011 4 years

Mr Gersom Katjimune Member 4 November 2002 14 December 2011 4 years

*In terms of section 11(2)(a) of the Electricity Act, the ECB’s CEO is an ex officio member of the Board but has no right

to vote.

In terms of section 7(1) of the Electricity Act, the Board is required to meet at least once every three months. During the

period under review, nine Board meetings were held of which four were ordinary meetings and five were special meetings.

During the reporting period, the Board members and their attendance at Board meetings of the ECB were as follows:

Table 2: Board Meetings

ELECTRICITY CONTROL BOARD MEETINGS 2014/15

Board Member Status Meetings Attended

Mr Jason Nandago Chair 6

Ms Panduleni N. Shimutwikeni Deputy Chair 4

Ms Foibe L. Namene CEO* 6

Mr Gottlieb Hinda Member 7

Mr Fritz Jeske Member 8

Mr Gersom Katjimune Member 7

Mr Rojas Manyame General Manager Regulation (Acting CEO)+ 2

*Mr Manyame was acting CEO from 31 March 2014 to 31 May 2014 until the appointment of Ms Namene as CEO on 1

June 2014.

14

1.1.4 Constitution of Board Committees

The ECB has established Board Committees and appointed thereto the Board members indicated in the table below:

Table 3: Board Committees

ELECTRICITY CONTROL BOARD COMMITTEES

Finance, Audit and Risk Committee Regulation Committee Human Resources and Remuneration

Committee

Mr Gersom Katjimune (Chair) Mr Fritz Jeske (Chair) Ms Panduleni N. Shimutwikeni (Chair)

Mr Gottlieb Hinda Mr Gottlieb Hinda Mr Gersom Katjimune

Mr Fritz Jeske Mr Jason Nandago Mr Jason Nandago

Ms Foibe L. Namene Ms Foibe L. Namene Ms Foibe L. Namene

* The CEO of the ECB is an ex-officio member of all the Committees.

1.2 Legislative Mandate

There has been no significant changes in the ECB’s

legislative mandate during the reporting period, which

is provided for in the Electricity Act No 4 of 2007. The

Act establishes a national regulatory framework for the

electricity supply industry and provides for licensing

of operators in the electricity supply industry (import,

export, generation, trading, transmission, distribution and

supply) as well as for independent tariff regulation by the

ECB. The ECB further continues to build on and extend its

regulatory mandate by means of appropriate regulatory

instruments.

1.2.1 Future Legislative ReformsThe Electricity Act is currently under revision. A new

Energy Regulatory Authority Bill is being finalised which

would see the transformation of the Electricity Control

Board into the Energy Regulatory Authority which in

addition to the regulation of electricity, would also be

responsible for the regulation of downstream gas and

petroleum.

i. The Namibia Energy Regulatory Authority Bill

In terms of this Bill, the ECB will be transformed into an

Energy Regulator whose duty will be to oversee electricity,

downstream gas and downstream petroleum in

accordance with energy-specific legislation. A major new

aspect to be introduced by the Bill is the establishment of

a specialised Energy Tribunal in the energy sector. The

objective of the Energy Tribunal would be to deal with

disputes and appeals lodged under the energy-specific

legislation.

ii. The Electricity Bill

This Bill will deal exclusively with the ESI, including

licensing and tariffs subject to Government policy. Specific

attention is paid to effective and efficient enforcement

mechanisms. The new Bill will broaden the scope for both

voluntary and compulsory enforcement mechanisms so

as to enable the Energy Regulator to ensure compliance

with the Bill and supplementary instruments such as rules,

codes and standards. The Bill will further create a more

formalised foundation for market reform to ensure the

growth and modernisation of the ESI.

iii. Gas Bill

The Gas Bill which is being developed provides for the

establishment of a regulatory and licensing framework for

gas transportation and distribution networks, licensing for

the downstream gas industry to ensure safety, efficiency

and environmental responsibility in the transportation and

distribution of natural gas, and will create the framework

to encourage investment in the sector and to promote

competition.

1.2.2 Legal InstrumentsIn the table below a summary is provided of past, current

and anticipated legal instruments through which the ECB

and the electricity industry are regulated:

15

Table 4: Legal Instruments

No NAME OF INSTRUMENT NATURE STATUS

A National Legislation

A1 Electricity Act, 2 of 2000 Statute Repealed

A2 Electricity Act, 4 of 2007 Statute In operation

A3 Namibia Energy Regulatory Authority Bill,

2014

Statute Draft Bill

A4 Electricity Bill, 2014 Statute Draft Bill

A5 Gas Bill National statute Under consideration

B Government Gazette Notices

B1 Imposition of Levy on Electricity under Elec-

tricity Act

Notice by Minister in

Government Gazette

Current operational ECB levy on

electricity

C Regulations

C1 Electricity Regulations: Administrative, 2000 Ministerial regulations Repealed

C2 Electricity Regulations: Administrative, 2011 Ministerial regulations In operation

D ECB Rules, Codes and Standards

D1 Technical Rules ECB rules Awaiting promulgation by Ministry

of Justice

D2 Economic Rules ECB rules Awaiting promulgation by Ministry

of Justice

D3 Resale Rules ECB rules Under development

D4 Safety Code ECB code In operation

D5 Quality of Supply and Services Standards Standard In operation

D6 Connection Charge Policy ECB rules In operation

D7 Transmission Grid Code ECB Code Approved by line Minister. Awaiting

promulgation by Ministry of Justice

D8 Distribution Grid Code ECB Code Approved by line Minister. Awaiting

promulgation by Ministry of Justice

D9 Net Metering Rules ECB rules Approved by line Minister. Awaiting

promulgation by Ministry of Justice

D11 REFIT Rules ECB rules Draft format

D12 Distribution Infrastructure Standards Standards Approved by line Minister. Awaiting

promulgation by Ministry of Justice

D13 Maintenance Guidelines Guidelines Awaiting promulgation

E ECB Internal Rules

E1 ECB Complaints Procedure (November

2010)

Internal ECB procedure Approved by means of ECB Board

resolution

E2 Mediation Procedures Internal ECB procedure Approved by means of ECB Board

resolution

E3 Public Hearing Procedural Rules Internal ECB procedure Approved by means of ECB Board

resolution

E4 Confidentiality Procedures Internal ECB Procedure Initial drafting stage

16

1.2.3 Legal ProjectsDuring the reporting period, work on the Farmers Schemes

Project and the Enforcement Mechanism Project, which

commenced in 2013, did not make significant progress

because there was a vacancy in the Legal Office, which

was only filled in November 2014.

The Farmers Schemes Project will investigate problems

experienced with existing farmer electricity distribution

schemes, and will provide recommendations for setting

up new schemes, while the Enforcement Mechanisms

Project is aimed at improving compliance with licensing

conditions and other regulatory tools.

The Farmers Schemes Project and the Enforcement

Mechanism Project will be completed during the next

reporting period.

1.3 Human Capital Management

IntroductionThe human resource function at the ECB encompasses

recruitment and selection, employee wellness, employee

relations, and training and development. This report

addresses all the areas of responsibility.

The ECB’s Human Resource Strategy is fully aligned to its

corporate strategy and therefore aims to attract and retain

key talent in order to build organisational competencies

and leadership capacity for long-term growth, and to

cement the ECB’s reputation as an employer of choice. It

is directed towards good levels of remuneration (which is

regularly benchmarked against its peers) and a concerted

effort to retain and manage the ECB’s talent pool.

1.3.1 AppointmentsDuring the reporting period, the number of staff members

employed by the ECB increased to 30, which is a good

indication of the substantial job creation opportunities

created by the organisation, with the following

appointments made:

Name Position

Mrs. F.L. Namene Chief Executive Officer

Mr. L.A.T. Amuanyena Senior Engineer

Mr. L. Namupala 2x Compliance

Mr. M.V. Shuudeni Monitoring Engineers

Mr. J. Malan Manager : Corporate & Legal

Services

Ms. D. Wakudumo Receptionist

1.3.2 PromotionsAs a result of the expansion of the organisational structure,

new positions were created with new staff members

appointed as well as existing staff members having been

promoted to higher positions during the reporting period.

17

The following staff members were promoted as indicated hereunder:

Name Promoted from: Promoted to:

Mrs. R Boois Accountant Manager: Finance

Mrs. C. Katjimune Assistant Account Accountant

Mr. F. Kooper Cleaner/Driver Assistant Accountant

Ms. V. Ethingo Receptionist Human Resource Officer

1.3.3 Staff Turnover

During the reporting period, only one staff member terminated employment with the ECB, resulting in a staff turnover of a

mere 3.23%; much lower than the industry norm of 10%.

COMPARATIVE ANALYSIS OF FILLED VS VACANT POSITIONS FOR 2014/2015

Figure 1: Filled vs. Vacant Positions

18

GENDER DISTRIBUTION AT DIFFERENT EMPLOYMENT LEVELS

Figure 2: Gender Distribution

VACANCIES EXPECTED TO BE FILLED IN THE 2015/2016 FINANCIAL YEAR

Legal Assistant

Public Relations Assistant

Modeller

Project Management Officer

IT Technician

1.3.4 Training and Development The Electricity Supply Industry (ESI) is a dynamic

environment and therefore our structured employee

training and development interventions are aimed at

raising the competency levels of our staff members,

encourage engagement and productivity, and to retain

key talent. Our leadership development programmes

develop skills and competence in specific areas. These

include business acumen, developing a global perspective,

leveraging diversity for high performance, and nurturing

and developing talent. For the period under review,

employees had attended training programs, workshops

and seminars locally, regionally and abroad. Some of the

training interventions, workshops and seminars attended

are listed hereunder:

19

Course/Workshop/Seminar Service Provider

Executive Development Program (EDP) University of Cape Town, SA

Operating Regulations for High/Medium Voltage Systems

Workshop

Amabhubesi

Managing Competitive Commercial Tenders Corporate Training and Events Management Division

International Training Program on Utility Regulation and

Strategy

University of Florida, USA

Africa Energy Indaba South African National Energy Association (SANEA), SA

1.3.5 Employee Wellness A number of key employee wellness initiatives

implemented during the reporting period included

improving employee awareness about health issues,

such as high cholesterol, diabetes and hypertension,

stress, anxiety and/or depression, and health and safety

awareness. A team building activity was held to improve

employee morale and cohesion.

1.4 Public Relations & Stakeholder Management

IntroductionThe ECB has for many years reflected on various Corporate

Social Responsibility initiatives in its Annual Report, but

not its Public Relations and Stakeholder Management.

The inclusion of this important aspect will enrich the

ECB’s reporting obligations.

1.4.1 Public RelationsThe Public Relations Department serves as the central

source of information to the ECB’s internal and external

stakeholders, as well as the public, on current and future

initiatives. Its key role is to enhance the image of the

ECB through developing and maintaining sound media

relations and to spearhead public education initiatives

in order to raise public awareness using various media

channels and tools.

1.4.2 Stakeholder ManagementStakeholder Engagement and Stakeholder Management

are relevant to any type of organization, especially in the

context of a regulatory authority.

The ECB identified the following groups as its stakeholders:

Government and other regulatory bodies; electricity

consumers; advocacy groups and representative bodies;

licencees; media; other electricity regulators and regional

bodies, and investors. Its stakeholder engagement and

stakeholder management strategies were extended to

these entities during the reporting period.

1.4.3 Public Awareness and SensitisationDuring the reporting period, the ECB deployed various

public awareness and sensitisation initiatives using the

mass media. Press conferences, radio and television

interviews on regulatory matters of the Namibian ESI

formed part of the strategies. The interviews conducted

were broadcast on NBC TV, NBC National Radio and its

Current Affairs Programme, Base FM, Radio Energy and

published articles in leading local magazines including the

internationally acclaimed TIME Magazine.

The ECB participated in the Windhoek Industrial and

Agricultural Show and the Ongwediva Annual Trade Fair.

The information disseminated answered questions on the

duties and functions of the ECB, rights and obligations

of various stakeholders and complaints handling and

resolution. Information was disseminated face-to-face

by ECB officials and through publicity materials such as

pamphlets, flyers, newsletters, the Annual Report and the

ECB’s Statistical Bulletin.

1.4.4 Impact of Stakeholder Engagement and Public Awareness Initiatives

The strategies and initiatives deployed improved

understanding of the ECB’s role in the Namibian ESI,

improved compliance on the part of regulated entities as

well as raising awareness through an increased number

of enquiries and consultations on regulatory matters from

consumers and potential investors.

Table 5: Selection of Training Interventions, Workshops and Seminars attended

20

1.4.5 Corporate Social Responsibility Cognisant of its Corporate Social Responsibility, the

ECB sponsored nine social and community development

initiatives to the value of N$270,000.00. The Hifikepunye

Pohamba Foundation and Hindjou Gardening received

the lion’s share of N$100,000.00 and N$79,000.00

respectively.

The ECB also offered bursaries and financial assistance,

worth more than N$310,000.00 to ten deserving students

from previously disadvantaged backgrounds for studies in

Engineering, Accounting and Law, amongst others.

1.4.6 Future OutlookSince efficient and effective communication is key for the

success of any institution, the Department will strive to

implement strategies geared towards improving the way

the ECB presents itself and communicates its mission,

vision, core values and functions with its internal and

external stakeholders and the public, as well as create

awareness and positive perception of the ECB as a brand.

1.5 Information Technology (IT)

IntroductionThe Information Technology function at the ECB serves

to support business processes, enhance communication

and to store organisational information. While IT is

used primarily for communicating and storing data

electronically, it is also used for more specialised

functions such as tariff determination, financial modelling

and enterprise resource planning.

1.5.1 Activities Carried Out

IT Procurement took precedence at the beginning of the

reporting period. Obsolete computer equipment was

replaced and new hardware & software was purchased for

new staff members. Furthermore, the network bandwidth

was doubled in order to increase the internet speed

and the accessibility to rich media content. In addition,

the internal Stock Control system was redeveloped. In

addition, IT support was extended beyond the main office

and now also caters to the ECB satellite office at Bismarck

Village.

A tender process was initiated to select a consultant

to implement an Electronic Document and Records

Management System (EDRMS). 13 companies submitted

bids, and subsequent to a thorough evaluation process, a

successful company was awarded the tender. The EDRMS

will be implemented in the 2015/2016 financial year. The

key deliverables of the project are:

• Development of a global file plan that complies with

the National Archives Act of 1992 and the Archives

Code of the National Archives of Namibia

• Development of document and record management

policies

• Training of ECB staff on filing principles

• Installation of a customisable EDRMS

Since 2010, the IT functions have primarily been

undertaken by one person, the IT Specialist. This posed a

risk to the organisation in terms of capacity and continuity,

and therefore to alleviate the risk, an IT Technician was

appointed in August 2014, initially on a contract basis and

then permanently as from March 2015. This appointment

was important as it has significantly improved the ECB’s

IT capacity.

1.5.2 Future OutlookThe main emphasis of IT will remain on maintaining the

operational functionality of the ECB’s IT infrastructure

and systems, and deliberate actions will be taken to look

at governance issues as well.

IT Governance (ITG) is defined as the processes that

ensure the effective and efficient use of IT in enabling

an organisation to achieve its goals. IT governance adds

structure to the process of aligning IT with business

strategies, producing measurable results, meeting

regulatory and legal obligations, and ensuring that

investments result in positive gains. Establishing an

IT Governance Framework will involve reviewing IT

practices, policies and procedures.

Operationally, the ECB’s IT setup is functional and sound.

It is now time for the focus to shift to a higher level. Going

forward IT will focus on aligning IT Strategy more closely

to the organisation’s fundamental strategic goal which is

to be “a leading regulator for achieving optimum viability

and competition in the Namibian energy industry.”.

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2. Economic Regulation

IntroductionThe Economic Regulation Department is responsible for

the regulation of the ESI through the provision of efficient

economic and financial guidelines and advice to the Board

and stakeholders, the development of the industry’s tariff

systems and methodologies in line with Government

Policies and Legislation. The Department determines

generation, transmission and distribution tariffs and the

approval of revenue requirements for all licencees. The

Department further evaluates and assesses the impact of

the ESI on the economy and the end consumers.

2.1 Tariff Setting and Methodology

Tariff setting is conducted in accordance with the White

Paper on Energy Policy of 1998, which states that tariffs

should be cost reflective, reflect the long-run marginal cost

of supply, and be based on sound economic principles.

The tariff methodology applied by the ECB is known as

a “cost plus” methodology. This implies that the revenue

requirement (i.e. the cost) of a utility plus a regulated

return (i.e. the weighted average cost of capital)

determines the end-user tariff. The revenue requirement

includes all allowable costs of the utilities to cover the cost

of supply including the primary energy, energy imports,

bulk energy purchases, operating and maintenance costs,

customer service cost, overheads, asset-related costs and

investment costs.

In determining the Namibian electricity tariff levels, the

ECB consults and takes into consideration the expectations

of key stakeholders including the Government, private

sector and consumers. Before approving a tariff the

Regulator conducts an assessment of the likely impacts

that tariffs may have on the end-consumers and the

Namibian economy at large. Each licensee needs to have

its tariff levels approved by the ECB Board before they

may be implemented, and this process repeats itself on

an annual basis.

2.2 Approved tariffsFor the financial period 2014/2015, the ECB granted

NamPower an effective average tariff increase of 13.22%.

In order to relieve the impact of a high tariff increase

on customers, the Ministry of Mines and Energy made

available to NamPower an amount of N$150 million and

an additional N$20 million from the National Energy Fund

– Electricity Levy, to subsidise fuel costs for the thermal

power stations (Van Eck and Anixas).

Accordingly, NamPower was awarded a tariff increase

that is sufficient to cover the allowed revenue requirement

for the financial period 2014/2015 which translates into

cost reflective tariffs allowed for NamPower.

Distribution utilities which include Regional Electricity

Distributors (REDs) and Local Authorities were granted

tariff increases according to their specific revenue

requirements. Over the past years, the ECB has ensured

that electricity tariffs are consistent with and reflective of

the following three main regulatory objectives:

• equitably rewarding of investors (recovery of

allowable cost of supply plus the regulated rate of

return) while keeping prices affordable to consumers;

• ensuring quality of supply and service, taking

cognisance of different quality standards and

associated costs; and

• maximizing operational efficiency through

restructuring and performance evaluation and

monitoring.

Figure 3 depicts the projected NamPower electricity price

path between 2013/2014 and 2019/2020.

23

Figure 3: Wholesale Electricity Price Path

In general, once tariffs have reached cost reflectivity they

will reflect the long-run marginal cost of supply. The LRMC

includes the cost of introducing new generation projects

into the Namibian electricity mix and is to incentivise

additional investments in the sector.

During the year under review, Namibia continued to be

a net importer of electricity. Namibia imported 58% of

its electrical energy requirements from countries in the

SADC region. A breakdown of the share of energy sources

is provided in figure 4. The required level of imports

depends heavily on the availability of water at NamPower’s

Ruacana Hydro Power Station. Figure 5 depicts the trend

of imported and locally generated energy over the period

2010/2011 - 2014/2015

Figure 4: Share of energy sources (GWh and percentage)

Source: ECB NamPower Gx Tx Model

Source: ECB NamPower Gx Tx Model

24

Figure 5: Percentage share of Local Generation vs Import - Energy

Figure 6: Impact of Imports and Electricity Tariffs in Namibia – Energy cost component

Figure 7: Impact of Imports on Electricity Tariffs in Namibia – Average Generation Tariff

Source: ECB NamPower Gx Tx Model

Source: ECB NamPower Gx Tx Model

Source: ECB NamPower Gx Tx Model

25

Figure 6 above indicates the contribution of local

generation and imports as a percentage of tariffs to the

cost component of tariffs in Namibia, while figure 7 shows

a breakdown of the cost of imports and local generation

on the average generation tariff.

During that period, the average tariff of imports was

higher than the Namibian local bulk generation tariff.

This implies that the generation tariff is substantially

determined by imports which the ECB has little influence

over. In addition to the cost of imported electricity, local

tariffs are driven by following factors:

• the need for NamPower tariffs to remain cost

reflective;

• the need for additional investments in the generation

sector;

• increases in the prices of commodities and primary

energy sources such as oil and coal.

2.3 Cost Reflectivity of TariffsDuring the reporting period, NamPower was granted a

cost reflective tariff as per the Cabinet directive which

states that the utility tariffs should reach cost reflectivity

by 2010/2011 and remain so thereafter.

Due to shortage of electricity supply in the country and

the region, it is projected that the tariff in Namibia will

keep increasing in order to meet and cover the high import

costs of electricity. In order to contain the high increases,

efforts such as the contribution from the National Energy

Fund will go a long way in cushioning high tariff increases

to the consumers.

The ECB has allowed tariff increases of distribution utilities

to remain cost reflective in those cases where cost

reflectivity has already been reached, and to enable others

to reach cost reflectivity. This presented a particular

challenge to the ECB, mainly because of the high local

authority surcharges in some areas as well as the

different levels of tariffs which still exist amongst different

distribution utilities. This is mainly due to the fact that

some smaller utilities are unable to implement the correct

approved tariffs hence charging artificially low tariffs.

2.4 Local Authority SurchargeThe introduction of the REDs and the resultant handover

of the electricity distribution function to such REDs had the

potential to significantly impact on the financial positions

of Local Authorities (LAs) and Regional Councils (RCs).

Previously, LAs utilised revenues from electricity sales

not only to cover the cost of electricity purchases and

distribution but also to cross-subsidise other municipal

services. The surplus contributed some N$213 million

per year to the revenues of local government and was a

significant source of income to the LAs/RCs.

The Local Authority Surcharge was created to financially

support LAs/RCs after they handed over the electricity

supply function to the newly formed REDs. The initial

charge was based on the actual difference between

revenue and costs as reflected in the ring-fenced

electricity accounts. This is consistent with Government

policy that LAs and RCs should not be adversely affected

when they join a RED.

As agreed with relevant ESI stakeholders, the original

LA Surcharge is a fixed dollar amount per year, and has

remained so over the past eight years. Currently, the LA

Surcharge is added to the electricity tariffs and collected

by the REDs on behalf of the relevant LA or RC.

During the reporting period, some distribution licencees

approached the ECB to convert the LA Surcharge to a cent

per kWh charge which means that the total amount will

be based on sales volumes in a particular LA area. The

REDs have also introduced minimum LA surcharges as a

measure of fairness for those areas that originally did not

qualify for a fixed LA surcharge.

The Regulator intends to review the LA Surcharge

methodology in the next reporting period.

26

2.5 Modified Single Buyer ModelThe Modified Single Buyer Model is aimed at securing

energy supply security and private sector participation in

the electricity generation sector. During the reporting period,

NamPower remained Namibia’s Single Buyer, and is the only

utility licenced to import, export and trade electricity. This

also implies that NamPower is the only off taker of electricity

sourced from any Independent Power Producer (IPP).

The proposed Modified Single Buyer Model will allow IPPs

to sell electricity to large power users and distributors such

as REDs, Local Authorities and Mines. This is envisaged to

increase IPP participation in the industry.

The process of finalising and implementing the “Modified”

Single Buyer Model is on-going. During the reporting

period, little progress was made in implementing this

new market model. This was mainly due to the structural

changes that are still required to transform the ECB into

a multi-sectoral energy regulator. It is envisaged that the

market model will be defined as part of the new regulatory

legislation, which will also make it easier to implement.

2.6 Economic Regulation Projects During the reporting period, the following projects

as identified in the ECB’s current Strategic Plan were

implemented:

• Development of Net Metering Rules

In 2013, the ECB developed draft Net Metering Rules to

allow small solar photovoltaic (solar PV) and micro-wind

generators to be connected to the local distribution grids

(less than 500kW).

Due to the likely financial impact of the Rules on the

distribution utilities, the Regulator embarked on an

analysis to assess the impact that the rules might have

on distribution utilities. The project was completed during

the reporting period and no adverse financial impact was

identified. The Rules were approved by the Minister of

Mines and Energy for endorsement and submitted to the

Ministry of Justice for promulgation. It is expected that

the Rules will be published during the last half of 2015.

• Renewable Energy Feed-In Tariffs (REFIT)

The USAID continued with its technical assistance

to develop Feed-in-tariffs and draft REFIT levels and

associated rules for renewable energy technologies from

500kW to 5MW capacity.

Draft Rules await finalisation of the interim REFIT Program

before approval will be sought.

• Study on a National Electricity Support Mechanism

The project identified and assessed regional and

international options used to shield low income

households against rising electricity prices.

The analysis included a review of the relevant legal,

regulatory, technical, financial and economic constraints

and implications of introducing electricity support tariffs,

and development of scenarios on how such mechanisms

could be funded. The study also quantified the impact

that the introduction of an electricity support mechanism

has on the country’s economy, the electricity sector as a

whole, and low income end-users.

The project was approved by the Minister of Mines and

Energy and has been submitted to the Cabinet Committee

on Trade and Economic Development for endorsement

before implementation can proceed in the next reporting

period.

• Development of a Support Mechanism to Improve

the Electrification of Households in Urban and

Rural Namibia

While the established residential areas of towns and

villages are largely fully electrified, there is still a significant

number of un-electrified households and businesses in

peri-urban/informal areas where mostly low-income

urban households are found.

The project involves identification of different options

and development of the support mechanism to improve

electrification rates of the households. The project is

expected to be completed during the first half of 2015.

• Development of a Tariff Model for Kudu Power

Project

The ECB has developed a tariff model specifically to

assess the tariff for the Kudu Power Project. The project

entails documenting the tariff review process, assessment

of different funding options and an assessment of the

impact on the national bulk electricity tariffs.

The project is expected to continue until a final investment

decision is taken on the project.

• Review of NamPower Assets Revaluation

The project was aimed at reviewing NamPower’s

transmission assets revaluation report to provide an

independent opinion and recommendations to the ECB

regarding the submitted value, methodology and the

applicable revaluation adjustments necessary between

the revaluation periods. The project involved visiting

all major transmission sub-stations around the country

to validate information in the reports. The project was

successfully completed.

2.7 Economic Regulatory Tools

2.7.1 Rules

(a) Economic rules (undergoing promulgation)

The objects of the Economic Rules are:

(i) to ensure the efficient functioning and

development of the electricity industry, efficient

electricity provision; and security of electricity

provision;

(ii) to ensure that electricity tariffs and charges allow

licencees a reasonable rate of return in accordance

with these Economic Rules and the Board’s tariff

methodologies in order to assure that licencees

are able to finance the electricity services and

activities of their licenced undertakings;

(iii) to establish an environment where the Board can

effectively exercise control over, monitor and

enforce the economic regulation of electricity.

(b) The Resellers Rules

The objects of these Rules are:

(i) to establish a regulated environment within which

currently un-licenced redistribution and resale of

electricity can take place in order to ensure the

efficient conveyance and delivery of electricity

under exempted circumstances;

(ii) to ensure that the interests of clients, supplying

licencees and other electricity licencees operating

in the same area as a redistributor are sufficiently

protected as regards pricing, safety and standards

on quality of electricity provision and service of

electricity so delivered;

(c) Net Metering Rules (undergoing promulgation)

The objects of Net Metering Rules are:

(i) the generation of additional power into the national

grid, reducing the investment requirements of

utilities and conventional independent power

producers;

(ii) to allow customer-generators to reduce their

energy purchases from distribution networks

through generating for own consumption;

(iii) to allow customer-generators to export to

distribution networks up to the customer-

generators’ imports from distribution networks,

and limiting capacity of installation to below

500kW.

(iv) the promotion of sustainable renewable energy

sources, small scale investments, value addition

and electricity market development;

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(d) Renewable Energy Feed in Tariff (REFIT) Rules:

The objective of the Rules is to set REFIT tariffs and the

conditions under which renewable energy would be

purchased. This only applies to RE technologies from

500kW to 5MW capacity.

2.7.2 Policies

National Connection Charge Policy

The overall objective of the National Connection Charge

Policy is to establish a standardized approach to dealing

with power network connections and associated

connection charges.

The Connection Charge Policy was endorsed by the

Minister of Mines and Energy and is effective as from

November 2012.

2.8 Future outlookThe substantial shortage of energy in the country is putting

pressure on energy tariffs. This situation will prevail until

sufficient new generation capacity is built locally and/or

regionally. The key challenge for the Economic Regulation

Department has been and still remains that of balancing

the interests and protection of the producers / suppliers

on the one hand, and the consumers on the other. The

Department will continue to monitor the impact of the

tariffs on the economy and to ensure that cost reflectivity

is maintained and electricity is supplied at affordable and

viable tariffs in a sustainable manner.

3. Technical Regulation

IntroductionThe Technical Regulation Department is responsible for

all engineering services required for regulatory oversight

or compliance and involves the development and

implementation of regulatory tools comprising technical

standards, regulations, rules and codes governing the

electricity network infrastructure design, operation

and maintenance. The Department focuses on quality

of supply and service issues, enforcing standards,

conducting technical audits, routine inspections and

accident/incident investigations.

3.1 Quality of Supply Standards The Namibian Quality of Supply standards were developed

in 2004 and their implementation commenced in 2006.

The implementation phase is to date still ongoing. Several

licencees have Power Quality Management Systems in

place and report to the ECB on an annual basis. As a result

of successful rolling out of the quality of supply project

from 2006 to date, through procurement and installation

of power quality data capturing, processing devices and

generation of power quality reports, the ESI has a relatively

good appreciation of what is involved in monitoring power

quality and managing potential risks linked to it.

Table 6 below illustrates the level of penetration of power

quality management systems based on the quantity of

functional monitoring devices procured and deployed by

licencees.

Table 6: Statistics on Quality of Supply logger placement

Licensee Power Quality

Devices - Vecto Graphs

Power Quality

Devices - Impedo Graphs

Functional

NORED 9 6 Yes

CENORED 0 5 Yes

ERONGO RED 19 3 Yes

OPE 5 2 Yes

City of Windhoek 25 10 Yes

NamPower 73 4 Yes

TOTAL 131 30

3.2 Quality of Service Standards The quality of service standards outline various service

activities and focuses on the minimum (guaranteed)

standards for measuring the quality-of-service provided

to customers by electricity distribution licencees in

Namibia. These standards are needed for evaluating

quality of service when granting distribution licences,

monitoring the performance of licencees on an ongoing

basis and when dealing with customer complaints.

The Namibian Quality of Service standards were

developed in 2004 and their implementation commenced

in 2006. The implementation phase is still ongoing.

3.3 Demand Side Management and Energy Efficiency

A study initially commissioned by the ECB to assess the

DSM status for Namibia was finalised in 2006. After

completion, a DSM Steering Committee (SC) was

established to facilitate the implementation of the findings

& recommendations of the study report. With passage of

time, activities of the SC slowed down, as a result of which

the committee was again revived at the beginning of 2015.

A stakeholder meeting to reaffirm consensus and discuss

the way forward was convened to revive DSM activities

during the reporting period.

The SC is the main body that oversees the implementation

of DSM Projects and creates a platform for DSM project

execution through policy making, technical support and

change agents to ensure that all the DSM projects become

a national success.

The key outcome of the 2006 DSM study report is the

implementation of specific DSM options identified for

Namibia using cost effective programs through:

• Consumer education;

• Dissemination of Compact Fluorescent Lights (CFLs)

and LED Lights;

• Time of Use (ToU) Tariffs;

• Installation of Ripple Control Systems for Electric

Water Heaters;

• Promotion of Solar Water Heaters;

• Promotion of energy audits.

A project to review the 2006 DSM study was

commissioned and advertised in the local media. The

process to evaluate the successful tenderer is underway.

3.4 Technical Regulation Projects

3.4.1 Wiremen’s Licensing Project

The focus of the project was to establish a national

institutional legal and regulatory framework for electrical

workers and electrical contractors in Namibia.

Through a broad consultative process, stakeholders

agreed to establish a National Stakeholder Working

Committee (SWC) to drive the process, chaired by

the ECB, with NamPower as the provider of secretarial

services.

The SWC objectives are to manage stakeholder relations,

secure resources required to drive the process, develop

the legal and regulatory framework, develop training,

certification and accreditation support mechanisms,

establish the Regulatory Body and implement

transformational change.

One of the project’s key milestones for the period under

review was the development of key road map documents

which include the Bill (for electrical workers and electrical

contractors), the electrical Installation Regulations, and

guidelines (Certificate of Compliance and Test Report)

and the registration criteria.

30

3.4.2 Enhancing Electricity Supply with the

National Integrated Resource Plan (NIRP)

The NIRP outlines and addresses the appropriate mix

of technologies and electrical energy requirements

needed for Namibia to achieve the aspiration of

sustainable economic growth. It further describes the

role of Government, ECB, Utilities, IPPs and other key ESI

stakeholders in meeting the country’s electrical energy

needs whilst building a sustainable industry.

The NIRP was developed between 2011 and 2013 under

the auspices of the Ministry of Mines and Energy. A

review process to summarise key outcomes of the NIRP

was undertaken during the reporting period as requested

by the Ministry of Mines and Energy. It was also

recommended that the NIRP be reviewed and updated to

be adequately responsive to new key developments with

respect to prioritised supply options and revised delivery

timelines.

3.4.3 Contestable Customers Project

The ECB commissioned a project to address a dispute

concerning the right to supply large power users, between

NamPower and REDs, particularly Erongo RED.

The project investigated all possible options and

extensively consulted with NamPower and Erongo RED

on the way forward. Key outcomes and conclusions have

been outlined in the final report.

3.4.4 Measurement and Verification Guidelines

Development Project

In order to credibly assess the impact of DSM and energy

efficiency measures being implemented by industry

stakeholders, the ECB commissioned a project on the

development of measurement and verification (M&V)

guidelines/protocols.

Four workshops took place. Key outcomes were:

• Introduction of Measurement and Verification

(M&V) general guidelines;

• Capacity building training on specific M&V

guidelines;

• Recommendations to initiate the process of

developing national standards on M&V;

• Practical M&V examples from participants.

On recommendations from industry stakeholders, the

Namibian Standards Institution (NSI) was formally

engaged to commence and lead the process of developing/

adopting M&V standards for Namibia.

3.4.5 Compliance Audits and Inspections

The Electricity Audit Manual and Inspection Guidelines

Group photo taken during the second National Stakeholder workshop at Heja Lodge in October 2014.

32

were developed and approved by both the ECB and the

Ministry of Mines and Energy. In line with the Audit

Manual and provisions of Section 37 of the Electricity

Act, Act 4 of 2007, the Electricity Control Board (ECB)

carried out technical compliance audits at the end of

2014 and at the beginning of 2015 on all licencees. The

ECB Audit Manual recommends that every licencee be

audited at least once every year. The objective of the

compliance audits is to establish the extent to which an

audited facility is complying with the stipulated licence

conditions, codes, standards and regulations.

Large licencees (such as NamPower and the REDs) were

generally found to be technically compliant, while small

licencees (such as village councils and regional councils)

were largely not compliant. Non-compliant issues ranged

from dilapidated electrical infrastructure to lack of proper

maintenance and safety concerns. Feedback letters were

prepared for licencees to address non-compliant issues

and follow up visits are being done regularly.

3.4.6 The state of affairs in smaller entities

(Okahandja, Maltahöhe and Berg-Aukas

Electricity supply at Okahandja, Maltahohe and

Beg-Aukas are a grave concern. The major concerns

include unsafe and illegal connections, aging electrical

infrastructure and live ABC cables lying on the ground.

These concerns were raised to respective stakeholders

for information and action.

3.4.7 Inspection of Hospitals and other Facilities

The project was initiated and commissioned by the ECB

to assess the status of availability and reliability of power

supply to Namibian hospitals and other critical service

facilities. This was partially necessitated by the tragic loss

of lives reported in the media and alleged to be a result

of unavailability of life support systems to designated

patients as a result of power supply failure.

Major critical facilities such as public and private hospitals,

airports and water pumping stations in all the 14 regions

were inspected at the end of 2014 and at the beginning of

2015 to assess the status and reliability of power supply.

Standby power supply at private hospitals and airports

was found to be reliable and servicing and maintenance

of standby generators is carried out adequately. Standby

power supply at public hospitals was generally found not

to be reliable and servicing and maintenance of standby

generators is not carried out adequately. Standby power

supply at water pumping stations is non-existent due to

the “no power no water” policy of Namwater. Feedback

letters were prepared for stakeholders to address non-

compliant issues.

3.5 Technical Regulatory ToolsIn line with provisions of Section 3 (4) (a) of the Electricity

Act; the Electricity Control Board (ECB), in consultation

with relevant industry stakeholders, developed several

regulatory tools for implementation to enhance the

regulatory processes.

3.6 Future OutlookWhile large distribution and supply entities such as

REDs and the City of Windhoek can be characterised

by satisfactory overall performance levels, the non-

compliance risk for smaller entities is high and it

would perhaps require a combination of appropriate

transformational and political interventions to address

these challenges.

Disillusioned by perceived perpetual mediocrity, electricity

consumers in some parts of Namibia are increasingly

frustrated by the mismatch between cost of service and

quality of supply and service. The regulatory challenge is

how to effectively enforce compliance in order to sustain

safety, consumer confidence and regulatory credibility.

There is no doubt that the impact of compliance auditing

will significantly enhance overall risk management efforts.

4. Regulatory Support Services

IntroductionThe main functions of the Regulatory Support Services

(RSS) Department are to research, plan, co-ordinate and

provide expert advice to the ECB on Namibia ESI issues as

well as to render support in the areas that are not clearly

economic or technical in nature.

The objectives of the Regulatory Support Services

Department are to ascertain that regulated aspects within

the Electricity Industry are operating according to set

objectives and performance frameworks and monitoring

these areas to ensure growth and financial health,

within the sector. Technical and economic compliance

of licencees and the enforcement of rules and codes

of conduct in the ESI remain a priority objective for the

Department.

33

4.1 Licensing Status and UpdateAmongst others, the ECB’s mandate according to the

Electricity Act of 2007, is to make recommendations

to the Minister with regard to the issuing of licences

and their conditions. The ECB is managing licences

for suppliers in the ESI by means of issuing, transfer,

amendment, renewal and/or cancellation. One of the

main task of the RSS Department, is the management

of licences and monitoring licencee performance

to ensure compliance with licence conditions and

requirements.

The licencing activities undertaken during the review

period are summarised in this section.

4.1.1 New Licences issued

• Aloe Investment (Pty) Ltd: A Generation Licence was

issued to Aloe Investment (Pty) Ltd at Rosh Pinah.

The plant will use solar PV technology with 4.9MW

capacity and the licence is valid for 25 years.

• Orange Hydro Falls (Pty) Ltd: A Generation Licence

was issued to Orange Hydro Falls (Pty) Ltd at

Velloorsdrift, the plant will be a mini hydro with a

20MW capacity and the licence is valid for 25 years.

• Camelthorn Business Venture (Pty) Ltd: A Generation

Licence was issued to Camelthorn Business Venture

(Pty) Ltd at Outapi, the plant will use solar PV

technology with 4.9MW capacity and the licence is

valid for 25 years.

• Sunchem Alpha Investment (Pty) Ltd: A Generation

Licence was issued to Sunchem Alpha Investment

(Pty) Ltd at Otjiwarongo. The plant will use biomass

technology with 5MW capacity and the licence is

valid for 25 years.

• Phatsimo Solar Power (Pty) Ltd: A Generation

Licence was issued to Phatsimo Solar Power (Pty)

Ltd at Otjiwarongo. The plant will use solar PV with

5MW capacity and the licence is valid for 25 years.

1.8.2.2 Licences amended

• OKA Investment (Pty) Ltd,

• Africa Energy Cooperation (Pty) Ltd

• Erongo Diagram Investment (Pty) Ltd

• Arandis Power (Pty) Ltd

• Ark Industries Namibia (Pty) Ltd

• Diaz Wind Power (Pty) Ltd

• GreeNam Electricity (Pty) Ltd for Mariental site,

• GreeNam Electricity (Pty) Ltd for Keetmanshoop

• GreeNam Electricity (Pty) Ltd for Rehoboth site

These amendments were necessitated, amongst

other reasons, to extend validity periods, and to meet

requirements under the interim REFIT programme.

4.1.2 Licences renewed

The distribution and supply licences in areas initially

earmarked for the Southern RED and Central RED were

renewed to local authorities for another year, as both

REDs have not been established yet.

4.1.3 Licences cancelled

Khomas Power (Pty) Ltd’s distribution and supply licences

were cancelled. The permission to distribute electricity in

the area in the interim was granted to Millennium Energy

until such time that the distribution business would be

taken over by NamPower.

34

4.1.4 Licences under review

• Kudu Power Company (Pty) Ltd applied for a

new generation licence for the development of an

884MW gas-fired power plant. The application was

subjected to both internal and external due diligence

processes. A recommendation was submitted to the

Minister of Mines and Energy and the ECB is awaiting

his final approval.

• Xaris Energy (Pty) Ltd applied for licence amendment

to increase capacity from the licenced 200MW up to

300MW. The ECB is busy finalising the application.

• Diaz Wind Power (Pty) Ltd applied for a licence

amendment to increase capacity from the licenced

44MW up to 72MW. The ECB is considering the

application.

Licensee Location Capacity

(MW)

Technology Date issued Duration

(Years)

Status

Diaz Wind Power Sperrgebiet near Luderitz 44 Wind 01-Apr-07 22 Valid

GreenNam Electricity Keetmanshoop 10 Solar PV 01-Jun-11 25 Valid

GreenNam Electricity Mariental 10 Solar PV 01-Jul-11 25 Valid

GreenNam Electricity Rehoboth 10 Solar PV 01-Jul-11 25 Valid

Arandis Power Arandis 120 HFO 01-Nov-11 30 Valid

Namibia Solar World Quinta, Omaheke Region 5 Solar PV 01-May-12 25 Valid

NamEnergy Solar Arandis 5 Solar PV 01-May-12 25 Valid

Momentous Energy Keetmanshoop 5 Solar PV 01-May-12 25 Valid

Uprise Investment Keetmanshoop 5 Solar PV 01-May-12 25 Valid

Ark Industries Namibia Rehoboth 16 Biogas 01-Jan-13 30 Valid

OKA Investment Ondangwa 20 Solar PV 01-Aug-13 25 Valid

Erongo Diagram

Investment

Arandis 5 Solar PV 01-Aug-13 25 Valid

Africa Energy

Corporation

Walvis Bay 5 Solar PV 01-Aug-13 25 Valid

Camelthorn

Business Venture

Outapi 4.9 Solar PV 01-Jul-14 25 Valid

Paramount

Infrastructure Dev

Khorixas 22 CSP 01-Sep-13 25 Valid

Osona Sun Energy Osona 4.5 Solar PV 01-Nov-13 25 Valid

Omburu Sun Energy Omburu 4.5 Solar PV 01-Nov-13 25 Valid

AFRES Okakarara 0.680 Solar PV 01-Apr-14 25 Valid

Phatsimo Solar Power Otjiwarongo 5 Solar PV 01-Jan-15 25 Valid

Table 7: List of Licenced independent Power Producers

• Metdecci Energy Investment (Pty) Ltd, Unisun

Energy (Pty) Ltd, FTN Investment (Pty) Ltd, Namib

Carbon Fertilizer (Pty) Ltd, Ombepo Energy (Pty)

Ltd, Alcon (Pty) Ltd and Tandii Investment (Pty)

Ltd applied for new generation licences to take part

in the interim REFIT programme. The ECB is busy

finalising the applications.

4.1.6 Independent Power Producers (IPPs)

The ECB issued licences to Independent Power Producers

as per Table 7 below. Diaz Wind Power, GreeNam

Electricity, Xaris Energy and Arandis Power are separately

negotiating with NamPower for a PPA since their licences

were issued before the interim REFIT process. The rest of

the licencees are designated to take part in the interim

REFIT Programme.

35

Licensee Location Capacity

(MW)

Technology Date issued Duration

(Years)

Status

Sertum Energy Trekkopje, Erongo Re-

gion

27 Solar PV 01-Apr-14 25 Valid

Xaris Energy Walvis Bay 200 Gas/OCGT 01-Apr-14 25 Valid

Aloe Investment No 27 Rosh Pinah 4.9 Solar PV 01-Oct-14 25 Valid

Alten Holdings

Namibia

Tsumeb 4.98 Solar PV 01-Jan-15 25 Valid

Alten Holdings

Namibia

Gerus 4.98 Solar PV 01-Jan-15 25 Valid

Sunchem Alpha

Investment

Cleveland, Otjozondjupa

Region

5 Biomass 01-Mar-15 25 Valid

Benzel Partners

Investment

Tsumeb 5 Solar PV 01-Mar-15 25 Valid

Hopsol Grootfontein 5 Solar PV Under con-

sideration

25 Under con-

sideration

Hopsol Otjiwarongo 5 Solar PV 01-Mar-15 25 Valid

Namibia International

Mining

Walvis Bay 210 Oil CCGT 01-Jun-07 20 Licence

lapsed

Vizion Energy

Resources

Walvis Bay 300 Coal 01-Apr-08 25 Licence

lapsed

VTB Capital Namibia Aussenkehr, !Kharas

Region

30 Hydro 15-Jul-07 20 Licence

lapsed

Electrawind Walvis Bay 50 Wind 01-Nov-09 20 Licence

lapsed

Innowind Walvis Bay 60 Wind 01-Mar-10 20 Licence

lapsed

CBEND Farm Pierre,

Otjozondjupa Region

0.250 Biomass 01-May-10 5 Licence

lapsed

EcoNam Energy Rehoboth 10 Solar PV 01-May-12 25 Licence

lapsed

Evofield Energy

Holdings

Farm Safier, Erongo

Region

10 Solar PV 01-Oct-12 25 Licence

lapsed

Atlantic Coast

Energy Co

Walvis Bay 700 Coal 01-Nov-07 25 Licence

lapsed

Table 7: List of Licenced independent Power Producers (continued)

36

The ESI is following the recommendations that were made

by a study carried out on how renewable energy must be

procured in Namibia. One such recommendation is that

any power plant with an installed capacity above 5MW

should be procured through competitive bidding and

all capacities less than 5MW, but should be larger than

500kW, procured through the Renewable Energy Feed in

Tariff (REFIT) programme. A total of 27 companies have

been shortlisted for the interim REFIT Programme and

once licenced will fill a capacity of 70MW reserved for

this Programme.

4.1.7 Challenges of IPPs to realise their projects

To date, the ECB licenced IPPs on an unsolicited basis. It

has become evident that most licensees wish to procure

financing on a finance basis, and their lenders have

demanded to see evidence of Government support in the

form of guarantees that the IPP will be able to operate

in Namibia during the full term of the PPA (average 20

years), and be able to service its debt and generate profits

for the investors.

The IPP requires certainty that the revenues from the Power

Project as per the PPA will not be deliberately eroded over

the term of the PPA through amongst others, Government

actions. IPPs need confidence in the investment climate

of the country, and require the Government to provide

certainty and stability guarantees on the risks related to

investing in Namibia, especially where the off-taker is a

wholly government owned institution, such as NamPower.

Government is investigating the need for such support.

Other challenges that IPPs are facing include: :

• Acceptable Tariffs

• Transmission connection charges

• Renewable energy mapping

Although NamPower is the official buyer and seller of

electricity on national level, instances are cropping up

of smaller IPPs wanting to sell their electricity to, for

example, REDs. The price at which the power would be

bought by NamPower or another off-taker is mutually

agreed upon and subject to approval by the ECB before

the IPP establishes its power plant. Under the proposed

Modified Single Buyer Model, NamPower retains the

exclusive right to import and/or export electricity across

Namibia’s borders.

4.2 Licensing ComplianceThe ECB continued to receive six monthly reports from

licensees during the reporting period in line with an

instruction given by the ECB Board in the 2009/10 period.

Regular reporting improves the monitoring process

by increasing the frequency of obligatory contact with

the ECB through feedback reports. Even in cases where

applicants failed to comply with stipulated conditions,

reports enabled the ECB to assess the level of practical

commitment demonstrated by the licensees through the

efforts made to overcome barriers. It also shed some light

on other non-commercial but equally important factors

hindering private sector participation.

37

4.3 Compliance Audits ConductedThree audits were conducted on the Witvlei Village

Council, Leonardville Village Council and SELCo during

the reporting period. The audits were done to monitor the

performance including adherence to the licence conditions

of the Village Councils and SELCo. The audits were further

aimed at ensuring that instances of non-compliance were

identified and that corrective action was taken to remedy

the non-compliance. The non-compliance findings on

the Village Council involved non-compliance to credit

control issues and appointment of appropriate staff for

the electricity section. The non-compliance issues at

SELCo mainly involved the proper compilation of the asset

register as per the ECB’s standards.

4.4 License ComplaintsIn accordance with the Electricity Act, licencees are

obliged to apply best practice principles to ensure high

quality customer service levels. The ECB uses the Quality

of Service and Supply Standards, Safety Code, Grid Code,

and maintenance practices as instruments to monitor and

evaluate customer service levels across the industry.

During the reporting period, the ECB investigated disputes

received from customers. The disputes received ranged

from tariffs and billing to complex technical cases.

No. Date Registered Details Status

1 2 December 2014 Nature of complaint relates to a tariff

charges validity

Investigation still on going.

2 17 September 2014 Nature of complaint is with regard to

connection charges.

Investigation still on going.

3 24 August 2014 Complaint relates to power outage

and connection issues resulted in

loss / damage property.

Investigation still on going.

4 14 August 2014 Henties Bay accident Resolved.

5 19 August 2014 Complaint relates to quality of sup-

ply.

Resolved.

4.5 ESI Capacity BuildingThe Namibian ESI is undergoing notable transformation

in terms of its structural, institutional, regulatory and

commercial framework arrangements. As part of its

immediate and long term objectives a training workshop

on improved project management in the ESI was held

with stakeholders on 27 June 2014, followed by a five day

project management training workshop with all licensees

on 14-18 July 2014.

The main objective of this workshop was to improve the

project management (PM) maturity of the Electricity

Supply Industry (ESI) through the development of a

Project Management Framework (PMF). This mandatory

Framework will be applied on all major projects managed

by licencees. The PMF with its templates is based on

world best practices (PMI’s PMBOK Guide) as well

as the status quo assessment of the ESI. The project is

expected to have a positive impact on the accuracy of

tariff determination due to that process’ dependency on

project cost budgeting, planning and progress reporting.

4.6 Regulatory Support Services Projects

4.6.1 On-line License Management System

The system caters for all aspects pertaining to the

application and maintenance of various licences issued by

the ECB. Under the system the following licences can be

applied for:

Table 8: List of Customer complaints reported

38

• Transmission

• Distribution/Supply

• Import

• Export

• Generation

The system allows the applicant to log into the ECB

website using his/her username and password and

complete the forms online. The system will enable the

user to partially complete the forms, save and continue

at a later stage. Mandatory requirements prevent

incomplete applications.

Due to the high volume of documents both internally and

externally, the system will improve efficiency in licence

and application processing, and will reduce the use of

paper.

4.6.2 Electricity Distribution Industry Reform

This project was initiated by the Ministry of Mines and

Energy in consultation with the Ministry of Regional and

Local Government, Housing and Rural Development, and

commissioned by the Electricity Control Board. It aims to

inform Namibian Electricity Distribution Industry (EDI)

stakeholders about the options to advance the reform of

the industry, and the implications of such reform options,

thereby facilitating the process leading to the conclusion

of the EDI consolidation process that commenced in 2001.

An EDI Summit was held from 1 - 3 October 2014, and was

hosted by the Ministry of Mines and Energy, the Ministry

of Regional and Local Government, Housing and Rural

Development as well as the ECB. With more than 200

participants, most of Namibia’s EDI actors and entities

were represented at the Summit. The project report and

outcomes were discussed at the Summit.

The Summit’s conclusions included;

i. There was consensus amongst all EDI stakeholders

that the EDI reform initiative has to proceed and be

finalised;

ii. Delegates pronounced themselves in favour of the

establishment of a Central RED, and a Southern RED;

iii. A sustainable local authority funding approach was

urgently required, and is seen as a pre-requisite to

completing reforms taking place in the EDI;

iv. Government had to consider the replacement of the

existing local authority surcharges in order to create

a more equitable and adequate funding approach for

all local authorities and regional councils, and also to

provide further relief to electricity consumers;

v. Government had to create further legal and statutory

supporting provisions to ensure that the REDs that

were already in operation as well as the to-be-created

REDs are enabled to comprehensively undertake all

electricity distribution functions in the country;

vi. NamPower’s continued shareholding in the REDs

remained a concern to most stakeholders, and needs

to be re-assessed and placed on a different footing

The Summit recommended the following initiatives:

i. Development of a Cabinet submission, to be

submitted by the Minister of MME to the appropriate

Cabinet forums, for their deliberation and approval.

ii. The MME and the Ministry of Urban and Rural

Development (MURD, formally MRLGHRD) to further

drive the EDI reforms.

iii. The ECB to initiate consultations to enhance the

statutory provisions to facilitate the creation of the

remaining REDs and ease concerns regarding the legal

basis of REDs.

iv. The MURD to look into local authority and regional

council funding with a view to improving their

sustainability.

4.6.3 Review of the Performance Management

Framework for the Namibian ESI

In 2014 the ECB commissioned a study to review the

“Financial and Technical Performance Management and

Monitoring Framework for Namibia”.

Subsequent to the completion of the project, the ECB

embarked on a follow-up project to develop a regulatory

database which was to be used to store and analyse

performance data and associated indicators.

The project reviewed the initial Framework as well as the

regulatory database, considering how effectively they

were used and how well they served the needs of both the

ECB and industry.

39

40

4.6.4 Development of a Technical, Financial and

Economic (Model) Toolkit for evaluating Renewable En-

ergy (RE) projects

The Regulatory Support Services Department has the

mandate to manage licences and make recommendations

with regard to the issue of licences.

In view of the above the ECB decided to engage a consultant

to develop a financial and economic performance model

to allow the Regulator to assess the financial viability

of project proposals to ensure the financial viability of

licence applicants through proposed tariffs.

The project commenced during the 2014/2015 financial

year and will be finalised during the next financial year.

4.6.5 Development of an Improved Project Manage-

ment System for the ESI

The ECB identified a need to develop guidelines for

improved project management (PM) procedures for the

Electricity Supply Industry stakeholders and the need to

ensure that Licensees apply good Project Management

principals within their organisations, based on sound and

effective project management guidelines. The Electricity

Act states that it is the role of the ECB to regulate the

various electricity activities in the country, which includes

among others guiding licencees to effective project

management practices. It is in the above context in

which the ECB decided to develop project management

guidelines for the Namibian ESI.

4.7 Future OutlookThe electricity sector is expected to see continued

interest in the development of supply options for Namibia.

The Regulatory Support Services Department intends to

focus its attention on implementing strategies to improve

the licencing and compliance functionality, ensuring

improvements in the overall sector performance and

ensuring that the sector remains viable. Through actual

data analysis clear signals would be sent to the industry

and to investors on the sector’s long-term sustainability.

5. Industry AnalysisNamibia’s electricity market is undergoing significant

transformation, through changing patterns of demand

and supply, developments in international markets and

technological change. To help plan for this future and to

make sound policy and investment decisions, Namibia

needs accurate, comprehensive and readily-accessible

energy data.

Namibia’s system hourly demand peaked at 629MW

including Scorpion Zinc Mine, during the 2013/2014

financial period. Units into the system have been relatively

stagnant over the past financial period, increasing

merely by 3.4% from 4,238GWh to 4,384GWh during

2013/2014 financial period. Notably, demand forecasts

in the NIRP reference case show that peak demand was

expected to have been at a capacity level of 614MW, in

energy terms 4,010GWh.

Unit sales declined from 3,861GWh in 2012/2013 to

3,831GWh in 2013/2014, mainly as a result of increased

transmission losses. This reflects lower demand for

electricity, caused by increased energy efficiency

practices in residential and non-residential sectors, and

consumer responses to higher retail electricity prices.

The most notable energy efficient practices include

increased rooftop solar PV installations by commercial

and residential customers, as well as off-grid installations.

Reforms of the modified single buyer model are slowly

taking shape with the implementation of the procurement

mechanisms, allowing for greater competition in the

generation of electricity. Namibia, like most of the region,

is embarking on developing new generation capacities in

both conventional and renewable technologies, aimed at

energy supply security and private sector participation.

The electricity sector is an engine of growth, both in terms

of driving economic growth and poverty eradication.

The correlation of adequate energy consumption and

economic development shows that GDP per capita

increases as per capita electricity consumption increases.

Namibia has the third highest household electricity

consumption per capita at 1,665.25kWh, against a SADC

regional average of 893.62 kWh. There is however still

room for further growth if we compare ourselves against

countries like South Africa at a household consumption of

4,818.82kWh and Seychelles at 2,817.21kWh per capita.

41

5.1 Electricity Sector Performance Results (Licensees performance)

Figure 8: A look at the value chain of the electricity sector

5.1.5 RED Areas

Table 9: Performance of REDs

>66kv <66kv <400kv

ESI Value Chain

-Installed capacity approx. 487 MW at the end of 2014 -Namibia's First Solar PV IPP under construction

-42% on average Produced locally -58% on average imported Import contract with: -ZPC -Eskom Supplementary -Eskom Off-Peak -Aggreko -Emergency energy -Zesco

-Namibia is characterized by long transmission lines -Transmission Network is 11 122 km Long -N$ 40 billion investment required over the next 5 years

-3 Operational REDs -establishment of 2 remaining REDs for Central and Southern Namibia -Distribution Network is 21 944 km long

-Contestable customers

KEY PERFORMANCE INDICATORS BENCHMARK 2011/12 2012/13 2013/14 3yr Average 2011/12 2012/13 2013/14 3yr Average 2011/12 2012/13 2013/14 3yr AverageFINANCIAL INDICATORS

ROA 1% - 7% 5.9% 3.5% 6.4% 5.3% 1.1% 2.6% 5.1% 2.9% 7.53% 7.10% 11.14% 8.6%Operating Margin 17% 18% 8% 12% 12.5% 2% 5% 8% 5.2% 16% 9% 12% 12.5%Current Ratio >1 2.37 1.39 1.30 1.68 1.14 1.56 1.82 1.50 2.37 2.01 2.06 2.15Quick Ratio >1 2.27 1.29 1.26 1.61 0.94 1.35 1.65 1.31 2.27 1.85 2.05 2.06TECHNICAL INDICATORSNetwork Losses 11% - 3% 14% 8% 6% 9.3% 15% 15% 18% 15.9% 8% 8% 8% 7.7%COMMERCIAL INDICATORSDebtor days 32days - 70days 63 65 59 62 42 47 44 44 55 74 75 68Operating Cost/ Sales 25%-40% 26% 35% 29% 29.8% 36% 26% 34% 31.8% 42% 28% 19% 30.0%Bad debts (%) 0.3% - 1.3% 0.0% 0.0% 0.0% 0.0% 0.3% 0.2% 0.1% 0.2% 0.4% 0.0% 0.0% 0.1%EFFICIENCY INDICATORSCustomers/ Employee 137 - 555 364 371 316 350 114 155 153 140 286 136 152 191Energy Sold/ Employee kWh 2400 - 9600 1620 1721 1856 1732 891 964 979 945 1371 1600 1689 1554

REGIONAL ELECTRICITY DISTRIBUTORS PERFORMANCE AGAINST IDENTIFIED BENCHMARKS FOR THE YEAR ENDED JUNE 2012,2013 & 2014

NORED CENORED ERONGO RED

-Costumer complaints handling-Peak demand 629MW

Source: Electricity Distributor’s Annual Report 2014

42

Regional electricity distribution licensees in Namibia have

been in existence for over 11 years now. In recent years,

the ECB has put increased attention on the measurement

of the performance of utilities. This trend is in line with

the overall regulatory directive that significant efficiency

improvements must be achieved in the power sector.

Over the years the ECB has measured the performance of

the distribution sector against set benchmarks comparing

the utilities to help assess the performance of individual

utilities in relation to their peers, and in this way identify

improvement measures or flaws.

NOREDs recorded headline results, were attributed to

growth of its asset base to just over a billion Namibian

dollars, a remarkable achievement, bolstered by its high

connection levels, with connection fees being 4% of total

revenue. ERONGO RED on the other hand connected

337 households, at a cost of N$ 3.1 million, which is a

meaningful contribution to the national electrification

initiative that is estimated to cost N$ 3.4 billion over the

next 10 years.

Notable performance gains by CENORED, from previous

years are evident on the financial indicators, displaying

improved signs of financial health, and sustainability,

through liquidity improvements. Network losses remained

worrisome, high at 18%, with no improvement from the

previous year’s performance.

These results continue to render the regional electricity

distribution sector financially viable for the financial

period 2013/2014.

SELCo’s operations has had a positive economic impact

on the communities it has provided services to over the

past couple of years, in comparison to challenges faced by

other local authorities that operate their own distribution

services. The service contracts within its area of operation

will remain in force until the establishment of the two

remaining REDs and completion of the EDI Reform.

Performance in all areas under review has reduced,

according to current performance trends, SELCo recorded

a net loss of N$ 1.4 million during the 2013/2014 financial

period, down from N$ 2.1 million profit from the previous

period.

Table 10: Performance of distribution companies outside RED area

OPE recorded positive performance results year on

year, with key performance indicator levels within the

benchmark levels.

These results continue to render the electricity distribution

companies outside the RED area financially viable for the

financial period 2013/2014.

5.1.3 Other Licensees outside the RED areas

The ECB reported in its 2013/2014 annual report on the

performance of distribution licencees outside the RED

areas, however the results was based on estimated figures

from the operating and reporting manuals. Due to actual

5.1.2 Non RED Areas

KEY PERFORMANCE INDICATORS BENCHMARK 2011/12 2012/13 2013/14 3yr Average 2011/12 2012/13 2013/14 3yr AverageFINANCIAL INDICATORS

ROA 1% - 7% -4.1% 10.2% 7.9% 4.7% 7.84% 10.77% 10.65% 9.8%Operating Margin 17% -2% 4% 3% 2.0% 8% 10% 9% 8.9%Current Ratio >1 2.72 1.84 2.15 2.24 1.73 2.00 1.92 1.88Quick Ratio >1 2.09 1.65 1.87 1.87 1.63 1.90 1.81 1.78TECHNICAL INDICATORSNetwork Losses 11% - 3% 10% 11% 7.9% 9.6% 9% 10% 7.7% 8.9%COMMERCIAL INDICATORSDebtor days 32days - 70days 54 57 52 54 31 36 31 33Operating Cost/ Sales 25%-40% 40% 21% 28% 29.5% 31% 20% 12% 21%Bad debts (%) 0.3% - 1.3% 1.2% 0.1% 0.2% 0.5% 0.2% 0.1% 0.0% 0.1%EFFICIENCY INDICATORSCustomers/ Employee 137 - 555 260 241 211 237 111 105 124 113Energy Sold/ Employee kWh 2400 - 9600 1956 1822 1647 1808 1333 1274 1336 1315

ELECTRICITY DISTRIBUTORS PERFORMANCE AGAINST IDENTIFIED BENCHMARKS FOR THE YEAR ENDED JUNE 2012, 2013 & 2014

Oshakati Premier Electric (Pty) Ltd

Southern Electricity Company (Pty) Ltd

Source: Electricity Distributor’s Annual Report 2014

43

data shortages from a majority of these licencees, the

ECB has not published their performance results, and will

embark on an outreach programme to educate licencees

on the performance framework, to populate data sheets

with actual data.

5.2 Key ESI StatisticsThe following section of the report contains a brief

overview of key ESI statistics. More detailed analyses are

available in the ESI statistical bulletin 2014/2015. The

information presented here is based on the three types of

customer categories namely Domestic, Commercial and

Large power users. The data used for this report is collected

by the ECB through tariff application requirements.

The Namibian local generation capacity has been

outstripped by the local demand (excluding Skorpion

Mine) since 2006, as shown in figure 9 above. The

installed generation capacity cannot meet the local

electricity demand of the country and therefore the

country relies heavily on imports from neighbouring

countries. According to NamPower 2014 Annual Report

it is stated that “power supply situation will remain

constrained until Kudu Gas Power, a new base load

power station of 800MW projected for 2019/2020 is

commissioned” therefore electricity tariffs increases are

expected until the Kudu Gas Power comes on board,

only then would tariffs stabilise, making Namibia a net

exporter of electricity .

Figure 10: Units into the system and units consumed

Figure 9: Namibian electricity generation vs demand

Source: ECB Statistical Bulletin 2014

Source: ECB Statistical Bulletin 2014

44

More than half of the units into the system are imported

from Eskom and other regional markets as shown in figure

2; this shows a higher ratio of dependency on imports.

The total units consumed continue to increase despite

shortage of generation capacity and high imports, this

has a major impact on pricing with high tariffs to recover

the costs of supply. As shown in figure 2, the electricity

supply from Eskom has reduced significantly over the

years since South Africa is experiencing electricity

shortage. Therefore, Namibia has increased her sourcing

of electricity from other markets within the region.

Figure 11: NamPower Losses

NamPower has managed to cap their electricity losses to figures below 15%. The highest percentage loss of 13% was

recorded in 2013/2014.

Figure 12: Retail Tariffs Increase over time

Source: NamPower Annual Report 2014

Source: ECB Operating Reporting Manual 2014

45

Figure 13 shows the average electricity tariffs trend from

2006/07 to 2014/15, characterised by gradual increments

over the years. A smooth curve graph indicates that there

were no tariff shocks experienced in Namibia thus far; this

indicates that the national electricity regulator has been

hard at work making sure that customers are protected

from tariff shocks.

Steep tariff increases were driven by persistent general

electricity shortage in the region since 2009/10 to cover

the high costs of electricity generation and imports. The

average retail price of electricity has more than doubled in

the last eight years in Namibia from 69 cents per kWh to

186 cents per kWh in 2014/15.

Figure 13: Average annual tariffs per customer category

The average annual tariffs have increased consistently

over the years; this is mainly due to the high costs of

electricity supply. Sharp increases were observed since

2010/11 for commercial customers and these increases

building up to the highest tariff paying customers in

2014/15 with an average of 211 cents per kWh compared

to the other customer categories.

Figure 14: Total number of customers per customer category

Source: ECB Operating Reporting Manual 2014

Source: ECB Operating Reporting Manual 2014

46

Figure 14 shows the total number of customers per each

customer category. The domestic customers are the

highest in numbers, followed by the commercial and

the least number of customers are Large Power Users

(LPU). There has been a gradual increase in the number

of customers over the years, the high increase has been

observed in the domestic and commercial customers

while the LPU has been constant with just below 2 200

customers in 2014/15.

Figure 15: Total Electricity Consumption

The total consumption of electricity has increased gradually over the years; LPU customers having the highest share of

consumption, followed by domestic customers and the least consumption of electricity are the commercial customers. The

total consumption of electricity has slightly increased in 2014/15. This was mainly due to the increase in new connections

for new domestic customers.

Figure 16: Total Electricity Revenue from Customers

Total Revenue collection per customer category - 2014/2015

Half of the total electricity revenue came from the LPU as shown in figure 16 in 2014/15 with 50%, followed by the

domestic customers with 31% and the commercial customers with 19%.

Source: ECB Operating Reporting Manual 2014

Source: ECB Operating Reporting Manual 2014

47

48

6. Regional and International

Activities

6.1 (Regional Electricity Association of Southern

Africa (RERA) Activities

The ECB continued to actively participate in all scheduled

RERA events and activities, including subcommittee

meetings held in Mbabane, Swaziland in August 2014

and the Annual General Meeting held in Victoria Falls,

Zimbabwe in November 2014.

RERA continued to benefit from ECB support on

administrative and operational matters. Within the

auspices of RERA, the ECB hosted technical staff from

the Energy Regulation Board (ERB) of Zambia and the

Zimbabwe Energy Regulation Authority (ZERA). The

two visiting teams benefitted from practical information

exchange on the ECB roll out of power quality management

systems and other relevant fields of interest.

6.2 African Forum for Utility Regulators (AFUR)

The ECB was represented at the African Forum for Utility

Regulators (AFUR) five-day international 11th annual

conference and general assembly under the theme :

“A Decade of Infrastructure Regulation on the African

Continent: Experiences, Challenges, Prospects”.The

conference was organized by African Forum for Utility

Regulators (AFUR) and hosted by Energy Regulatory

Commission (ERC), Kenya. The conference drew a wide

range of participants from: regulatory agencies in Africa,

consultants and non-governmental organisations. In all, 11

presentations and one panel discussion session were held

at the conference.

This forum brought regulators together to discuss what

they can do to improve their performance and hence

institute appropriate clarity of the relationship amongst

different role players, utilities, government and regulator

which is crucial to minimize investor risks and at the same

time to protect consumer’s interests.

6.3 International Electrotechnical Commission

(IEC) and the African Electrotechnical Standardization

Commission (AFSEC)

Namibia is a member of the African Electrotechnical

Standardization Commission (AFSEC) through the

Namibia National Electrotechnical Committee (NaEC).

The ECB holds Chairmanship of NaEC. During the period

under review the ECB attended the AFSEC General

Assembly (GA) in Kinshasa, Democratic Republic of

Congo (DRC). During the GA, Namibia was nominated

and selected first Vice President of AFSEC.

Namibia, through the National Electrotechnical

Committee (NaEC), is also an Affiliate member of the

International Electrotechnical Commission (IEC). The

IEC is a not-for-profit, non-governmental organisation,

founded in 1906 to develop international electrotechnical

standards. The IEC’s members are National Committees,

and they appoint experts and delegates coming from

industry, government bodies, associations and academia

to participate in the technical and conformity assessment

work of the IEC. Through the NaEC, Namibia adopts

IEC standards. During the period under review, the ECB

participated in the 78th IEC Annual General Meeting held

in Tokyo, Japan where developments on international

standards were discussed.

6.4 World Energy Council (WEC)

ECB attended the annual Executive Assembly of the WEC

meeting, hosted in Colombia, by the Colombian Member

Committee of the WEC. The Executive Assembly was

attended by participants from over sixty (60) countries.

The WEC community and representatives from Colombia

and energy sectors from around the world gathered for a

series of open and private discussion sessions on energy

issues, and to find options for delivering sustainable

energy system on national, regional and global level.

The event also hosted the WEC’s major governance

meetings, the World Energy Leaders; the Future Energy

Leaders and Energy Trilemma Summit, culminating in the

full Executive Assembly Plenary.

49

During this summit the Energy Leaders and the wider

WEC community addressed the Energy Trilemma debate,

the triple challenge of balancing energy security, energy

equity and environmental sustainability.

The World Energy Trilemma report looks at how efficiently

member countries and their policies are managing the

energy trilemma; how to mitigate energy security, how to

mitigate the environmental impact of energy production

and use, and to ensure energy is available to all and at an

affordable price.

PERFORMANCE BY ACTIVITY/PROJECT

7. Overview of ECB Performance

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

Transformed ECB as Energy Regulator

Completion of Energy Regulatory Authority Bill and new Electricity Bill

Promulgation of new Bills

Bills drafted and work-shopped

Completion and promulga-tion of Bills

a Work on Bills delayed due to new develop-ments in the ESI during the reporting period. The Bills are however currently under review and are expected to be finalised in Q4 2015

Farmer Schemes Project

Report on farmer schemes and model recommen-dations

Report approved by the Board

Project commenced but was delayed due to the resignation of the Legal Manager

Project did not progress during 2014/15

a Project has recom-menced and is expect-ed to be finalised by December 2015

Enforcement Mechanisms Project

Report on enforce-ment mechanisms to improve compliance with license conditions

Report approved by the Board

Project commenced but was delayed due to the resignation of the Legal Manager

Project did not progress during 2014/15

a Project has recom-menced and is expect-ed to be finalised by November 2015

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

Culture of customer service high performance, motiva-tion,learning and knowledge sharing

1) Implemen-tation of the Organisational Climate & Culture Survey results

a) Improved staff morale and working environment

The Organisational Climate Perception Survey was completed .

The recommendations of the Organisational Climate Perception Survey con-ducted in 2013/2014 were implemented, with various interventions being on track and ongoing.

a

2) Development of an Employee Wellness Program

b) Culture of learn-ing and knowledge sharing as meas-ured by an annual survey, measuring people, processes & technology

All the planned employee wellness initiatives have been achieved.

The employee wellness programs planned for the period under review have been achieved.

a

3) Skills Audit and Human Resources Development implementation

The terms of reference was completed and sub-sequent to the placement of an advertisement, a consultant was appointed, to commence with the conceptualisation of the project.

The consultant has commenced with the con-ceptualisation of the project. The final report is due in the new financial year.

a This project was delayed due to external factors. The qualifica-tion documents were sent to the Namibian Qualification Authority, which has resulted in the completion of the project.

Good leadership with sufficient skills and staffing

Review of Performance Agreements

To have standard-ised and measur-able performance agreements in place

N/A The terms of reference was drawn up and the consultant appointed has commenced with the implementation of the project, which is due for completion in the new financial year.

a

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

Supporting automated and integrated ICT & MIS for proper planning, knowledge management and deci-sion-making

1) Implement Electronic Doc-ument Resource Management System (EDRMS)

Installed EDRMS by December 2015

N/A 1) Develop terms of reference 2) Appoint consultant 3) Project kick-off

a

Good stakeholder communica-tion, relations, awareness and collaborative arrangements

2) Website revamp

Redesigned ECB website

N/A 1) Design website structure 2) Develop terms of reference 3) Appoint consultant 4) Website development 5) Launch website

a

50

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

Good stakeholder communica-tion, relations, awareness and collaborative arrangements

1) Undertake a Stakeholder Survey

a) Report with clear recommendations.

Stakeholder Survey was completed .

Implementation of recom-mendations of the survey conducted.

a

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

More sus-tainable use of natural re-sources through increased use of renewable energy for generation

Investigation of Net Metering and developing relevant rules

Net Metering rules Draft rules developed Net Metering - Financial impact assessment

a Rules submitted to the Ministry of Justice for promulgation

Transparent and supportive tariff system

Study balance between quality and affordability

a) Tariff system operational b) Communi-ties connected c) Percentage of tariff utilised

None None a Implementation of the supportive tariff mech-anism being awaited

Improved access to all ur-ban, peri-urban and rural areas

Rural Electrifica-tion: Support rural electrification efforts with MME and others

a) Rural 19% b) Peri-urban 40% (estimates)

None Project incorporated with the Peri Urban and Rural Electrification Support Mechanism

a Project moved to the development of the support mechanism in the interim while awaiting a response to the letter sent to the MME seeking support

Transparent cost-reflective tariffs

Investigate actual costs and cost reflective tariff structures interna-tionally

Implementation of cost reflective tariffs (80%)

Produced a draft RERA tariff publication 2011

Produced a RERA tariff publication 2011 and 2014

a

Improved access to all ur-ban, peri-urban and rural areas

Improved meth-ods: Recommend methods of im-proving electricity access to relevant utilities

a) Rural 19% b) Peri-urban 40% (estimates)

Project commenced Project completion and Support developed

a

Improved access to all ur-ban, peri-urban and rural areas

Peri-urban support systems: Develop together with MRLGHRD and MME, support systems for utilities to improve access to peri-urban areas

a) Rural 19% b) Peri-urban 40% (estimates)

Project commenced Project completion and support developed

a

Transparent cost-reflective tariffs

Investigate Incentive Based Regulations - 2015

None None a The country still relies on imports and much of the generation cost is determined from outside the country.

Designed and implemented Modified Single Buyer

Implement modi-fied Single Buyer

Ensure that the MSBM is included in the Electricity Bill

a Promulgation of the Electricity Bill being awaited

Designed and implemented Modified Single Buyer

Develop and Implement Market Rules

None None a Depends on the approval of the Market Model

Promoted cross-border transmission gateways

Develop a na-tional Connection Charge Policy

Policy approved and adopted

a

Economic growth equita-bly distributed

Assess PPP models suitable for Namibia

a) Per capita consump-tion of power annually [1.54 MWh], b) Electricity contribution to GDP [N$ 4,929 million] c) Number of new jobs created in ESI (during construction, operation)

a Project put on hold due to the establishment of the PPP Office in the Ministry of Finance, with a PPP policy being developed for the country.

Transparent cost-reflective tariffs

Update Tariff Study (Cost of Supply Study)

Transparent cost-reflective tariffs

Review of the NamPower trans-mission assets revaluation

Review report produced

Project completed a

51

More sus-tainable use of natural re-sources through increased use of renewable energy for generation

Review tariff mechanisms for renewable energy for implemen-tation

Develop REFIT rules Draft REFIT rules Interim REFIT commenced a

Transparent and supportive tariff system

Conduct a com-prehensive study for a national supportive tariff system in Namibia

Development of the ST Mechanism

Implementation of the ST Mechanism

a

New Develop and de-sign a tariff model for the Kudu Power Project and Independent Power Producers

Kudu Power Project license reviewed and tariff determined

a

New Reconciliation of NamPower RR

Reconciliation conducted and implemented for the period 2011 - 2013

a

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

To establish the extent to which an audited facility complies with the stip-ulated license conditions, safety codes, standards and regulations

Development of an Audit and Inspections Manual

Feedback letters, audit reports and compliance monitoring tracking forms

N/A Completion, management and board approval of Audit and Inspections Manual - First ever technical audits

a

To review the existing meth-odology used to determine total transmission losses

Reduction of transmission Losses

Significantly reduce existing and future technical and non-technical losses.

N/A Development of the terms of reference. The project , being jointly carried out with NamPower is ongoing and will continue into the new financial year.

a

To address iden-tified gaps in the operational environment of electrical workers and contractors

Wiremen’s licensing

Effective implemen-tation of the frame-work and developed guidelines

None Development of: - The Electrical Installation Regulations - The Electrical Workers and Contractors Bill - The Electrical Workers and Contractors Regulation Guidelines - The Electrical Workers and Contractors Licensing Board guidelines

a

To independent-ly analyse and report on Demand Side Management (DSM) and En-ergy Efficiency saving impacts

Development and implementation of Measurement and Verification (M&V) guidelines

Quantification of DSM initiatives

N/A Project introduction to stakeholders and presenta-tion of an overview and general showcase of the M&V guidelines. The project is continuing in the new financial year.

a

To review and update the outcomes of the existing draft National Inte-grated Resource Plan (NIRP) in order to accom-modate all new development projects

Review, update and summary of NIRP

A comprehensive plan, modelling tools, capacity building training and skills transfer

N/A Development of the terms of reference. The project is continuing in the new finan-cial year and a consultant will be appointed.

a

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

Licensee com-pliance through inspections, enforcement, incentives and penalties

1) Licensing process: Development of a computerised license application and evaluation process

a) Improved quality license application submissions

Appointment of a consultant

The final project report submitted

a

2) Development of an Employee Wellness Program

b) Improved timely license application evaluations

User acceptance testing and production set-up

System on-line

a

3) Skills Audit and Human Resources Development Implementation

Training Provided to ECB Staff

There is an urgent need to update and review latest developments

52

Better Management by Distribution Utilities

REDs establish-ment

To have both the two remaining REDs established

Consultant appointed to determine how the remaining REDs be established

Final Report to be presented to all key stakeholders

a Cabinet submission to be finalised

Performance Management Sytem in place with Performance Contracts and Service Charters developed

Develop an ESI Performance Management Framework

Improved Licensee Performance

Appointment of a consultant

Final report to be presented to all key stakeholders

a

Increased electricity gen-eration through improved private sector involvement and investment

Development of a Technical, Finan-cial and Economic (Model) Toolkit for evaluating Renewable Energy (RE) projects

Develop a model to evaluate the sustainability of RE projects

Appointment of a consultant

Final model to use during RE license application reviews

a Project delayed due to time extension request by consultant. Project to be finalised during the next financial year

Improved project manage-ment

Develop an ESI Project Manage-ment Framework

Licensees to be trained in Project Management

Licensees applying good project man-agement practices

Appointment of a con-sultant and stakeholder / licensee visits

Final report to be presented to all key stakeholders

a Project enforcement and compliance adher-ence to start during the next financial year

OBJECTIVEPLANNED ACTVITY

PERFORMANCEINDICATOR

ACTUAL ACHIEVEMENT2013/2014

PLANNED TARGET2014/2015

ACTUAL ACHIEVEMENT 2014/15

COMMENT ON DEVIATIONSTarget

metTarget

not met

Target exceed-

edRemoved

53

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ctr

icity

co

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54

CONTENTS PAGE

Board members’ responsibility for financial reporting 55

Board members’ approval of the annual financial statements 55

Independent auditor’s report 56 - 57

Report of the Board members 58

Statement of profit or loss and other comprehensive income 59

Statement of financial position 60

Statement of changes in equity 61

Statement of cash flows 62

Notes to the annual financial statements 63 - 73

Detailed statement of profit and loss and other comprehensive income 74

8. Contents - Annual Financial Statements

55

BOARD MEMBERS’ RESPONSIBILITY FOR FINANCIAL REPORTING

The members of the Board are responsible for the maintenance of adequate accounting records and the preparation and

integrity of the annual financial statements and related financial information. The annual financial statements are prepared

in accordance with International Financial Reporting Standards. The Board’s independent external auditors have audited

the financial statements and their report appears on pages 56 to 57.

The Board members are also responsible for the systems of internal financial control. These are designed to provide rea-

sonable but not absolute assurance as to the reliability of the financial statements, and to adequately safeguard, verify and

maintain accountability of assets, and to prevent and detect material misstatement and loss. The systems are implemented

and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come

to the attention of the Board members to indicate that any material breakdown in the functioning of these controls, proce-

dures and systems has occurred during the year under review.

The annual financial statements are prepared on a going concern basis. Please refer to page 58 of the Members’ report

where the appropriateness of the going concern assumption is discussed in detail.

BOARD MEMBERS’ APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS

The annual financial statements set out on pages 58 to 73 were approved by the Board members on 20 August 2015 and

are signed on their behalf by:

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF ELECTRICITY CONTROL BOARD

We have audited the annual financial statements of Electricity Control Board, which comprise the statement of financial

position as at 31 March 2015, the statement of profit and loss and other comprehensive income, the statement of changes

in equity, the statement of cash flows for the year then ended, the report of the Members, and a summary of significant

accounting policies and other explanatory notes, as set out on pages 58 to 73.

Members’ responsibility for the annual financial statements

The members are responsible for the preparation and fair presentation of these annual financial statements in accordance

with International Financial Reporting Standards and as required by the Electricity Act (No 4 of 2007), and for such internal

control as the directors determine is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our

audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical require-

ments and plan and perform the audit to obtain reasonable assurance whether the annual financial statements are free

from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material

misstatement of the annual financial statements, whether due to fraud or error. In making those risk assessments, the audi-

tor considers internal control relevant to the entity’s preparation and fair presentation of the annual financial statements in

order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall pre-

sentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the annual financial statements present fairly, in all material respects, the financial position of the Electricity

Control Board as at 31 March 2015, and of its financial performance and its cash flows for the year then ended in accordance

with International Financial Reporting Standards and as required by the Electricity Act (No 4 of 2007).

56

57

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF ELECTRICITY CONTROL BOARD (continued)

Other matter

Without qualifying our opinion we draw attention to the fact that the supplementary information set out on page 74 does

not form part of the annual financial statements and is presented as additional information. We have not audited this

schedule and accordingly we do not express an opinion on it.

Deloitte & ToucheRegistered Accountants and Auditors

Chartered Accountants (Namibia)

Per AA Akayombokwa

Partner

Windhoek

20 August 2015

58

ELECTRICITY CONTROL BOARD

4

REPORT OF THE BOARD MEMBERS for the year ended 31 March 2015 The Board members have pleasure in presenting their report on the activities of the Board for the year ended 31 March 2015. BACKGROUND AND OPERATIONS The Electricity Control Board was established by the Government of the Republic of Namibia in terms of the Electricity Act No 2 of 2000 (repealed by Electricity Act No 4 of 2007), to exercise control over the electricity supply industry and to regulate the generation, transmission, distribution, use, import and export of electricity in accordance with prevailing Government policy so as to ensure order in the efficient supply of electricity. RESULTS The results of the Board are fully set out in the attached annual financial statements. DIVIDENDS No dividends have been paid or declared during the year (2014: Nil). BOARD MEMBERS AND SECRETARY The members of the Electricity Control Board during the year and at the date of this report were as follows: Mr. Jason Nandago (Chairperson) Mr. Gersom Katjimune Ms. Panduleni Shimutwikeni Mr. Fritz Jeske Mr. Gottlieb Hinda Board Secretary Mr Johann Malan Business address: Postal address: No 8 Bismarck Street P O Box 2923 Windhoek Windhoek NAMIBIA NAMIBIA SUBSEQUENT EVENTS The Board members are not aware of any fact or circumstance, which occurred between the date of the financial statements and the date of this report, which might influence an assessment of the Board’s state of affairs and require disclosure in these financial statements. GOING CONCERN The Board earned a surplus of N$ 9 945 488 (2014: N$ 13 190 214) and a surplus of N$ 11 468 958 is forecasted for the 2015/16 financial year. The Board has also accumulated sufficient surplus to absorb any future losses and together with future revision to the levies, these will ensure the operational existence of the Electricity Control Board and this confirms the appropriateness of the going concern basis in the preparation of the annual financial statements.

59

ELECTRICITY CONTROL BOARD

5

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 31 March 2015 Restated Notes 2015 2014 N$ N$

REVENUE 4 56 538 498 48 254 484 Other income 89 113 831 370 Operating costs (48 489 922) (38 385 210) Decrease in provision for projects 12 - 1 082 283

SURPLUS BEFORE INTEREST 8 137 689 11 782 927

Interest received 1 807 799 1 407 287 SURPLUS BEFORE TAXATION 5 9 945 488 13 190 214 Taxation 7 - - TOTAL COMPREHENSIVE SURPLUS FOR THE YEAR 9 945 488 13 190 214

60

ELECTRICITY CONTROL BOARD

6

STATEMENT OF FINANCIAL POSITION as at 31 March 2015 Restated Restated Notes 2015 2014 2013 N$ N$ N$

ASSETS NON-CURRENT ASSETS Property, plant and equipment 8 9 360 084 8 354 446 7 526 406 CURRENT ASSETS 62 059 217 50 339 110 38 107 741 Trade and other receivables 9 5 838 630 6 404 855 4 021 741 Bank balances and cash 10 56 220 587 43 934 255 34 085 957

TOTAL ASSETS 71 419 301 58 693 556 45 634 104 RESERVES AND LIABILITIES RESERVES 61 556 414 51 610 926 38 420 712 Revaluation reserve 4 137 025 4 137 025 4 137 025 Accumulated funds 57 419 389 47 473 901 34 283 687

CURRENT LIABILITIES 9 862 887 7 082 630 7 213 392 Trade and other payables 11 9 862 887 7 082 630 4 781 088 Finance lease - - 35 879 Trust funds – MME projects - - 2 396 425

TOTAL RESERVES AND LIABILITIES 71 419 301 58 693 556 45 634 104

61

ELECTRICITY CONTROL BOARD

7

STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2015

Note Revaluation

Reserve Accumulated

Funds

Total N$ N$ N$

Balance at 1 April 2013 - 29 363 139 29 363 139 Prior year adjustment 12 - 4 920 548 4 920 548 Other comprehensive income for the year 4 137 025 - 4 137 025 Balance restated at 31 March 2013 4 137 025 34 283 687 38 420 712 Surplus restated 13 190 214 13 190 214 Surplus previously stated - 12 107 931 Prior year adjustment 12 - 1 082 283 Balance at 31 March 2014 4 137 025 47 473 901 51 610 926 Surplus for the year - 9 945 488 9 945 488

Balance at 31 March 2015 4 137 025 57 419 389 61 556 414

62

ELECTRICITY CONTROL BOARD

8

STATEMENT OF CASH FLOWS for the year ended 31 March 2015 Note 2015 2014 N$ N$

CASH FLOWS FROM OPERATING ACTIVITIES 14 154 314 13 682 540 Cash received from government and customers 57 104 723 45 871 370 Cash paid to suppliers and employees (44 758 208) (33 596 117) Cash received from operations 17 12 346 515 12 275 253 Interest received 1 807 799 1 407 287

CASH FLOWS FROM INVESTING ACTIVITIES (1 867 982)

(1 401 938)

Proceeds on property, plant and equipment 145 000 142 781 Acquisition of property, plant and equipment (2 012 982) (1 544 719) CASH FLOWS FROM FINANCING ACTIVITIES

-

(2 432 304)

Decrease in Trust Funds -MME Projects Finance lease payments

- -

(2 396 425) (35 879)

Net increase in cash and cash equivalents 12 286 332 9 848 298 Cash and cash equivalents at the beginning of the year 43 934 255 34 085 957

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 56 220 587 43 934 255

63

ELECTRICITY CONTROL BOARD

9

NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015 1. BASIS OF PREPARATION The annual financial statements are prepared on the historical cost basis, except for financial

instruments which are carried at fair value. The principal accounting policies, which have been consistently applied in all material respects, comply in all material respects with International Financial Reporting Standards (“IFRS”) adopted by the International Accounting Standard Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB.

1.1 STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED STANDARDS THAT

ARE NOT YET EFFECTIVE

The Board has adopted all the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting years beginning on 1 April 2014. However, the adoption of the standards and interpretations did not result in any material adjustments to the reported figures.

IFRS 7 Financial Instruments: Disclosures IFRS 13 Fair Value Measurement IAS 16 Property, Plant and Equipment IAS 19 Employee Benefits IAS 27 Separate Financial Statements IAS 31 Amendments arising from Recoverable Amount Disclosure for Non-Financial Assets IAS 32 Financial Instruments: Presentation IAS 36 Impairment of Assets

None of the standards, as indicated above that were effective for the current accounting year, had

an impact on the results or financial position of the Board.

At the date of authorisation of these financial statements, the following Standards and Interpretations were issued but not yet effective:

New/Revised International Financial Reporting Standards and interpretations Effective Date

IFRS 7 Financial Instruments: Disclosure Deferral of Mandatory Amendments to Transition Disclosure 1 January 2015

IFRS 15 Revenue from Contract with Customers 1 January 2017

IFRS 19 Defined Benefit Plans: Employee Contributions 1 January 2015 IAS 36 Recoverable Amount Disclosures for Non-Financial Assets 1 January 2015 IAS 39 Novation of Derivatives and Continuation of Hedge Accounting 1 January 2015 IFRIC 21 Levies 1 January 2015

The Board members anticipate that the adoption of these statements and interpretations will have no material impact on the financial statements in future periods.

64

ELECTRICITY CONTROL BOARD

10

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015 2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Revenue Revenue comprises levies, licence and registration fees collected in terms of the Electricity Act No 2

of 2000 (repealed by Electricity Act No 4 of 2007) to defray costs necessarily incurred by the Control Board and are recognised on an accrual basis.

2.2 Property, plant and equipment Land and buildings held for use in the production or supply of goods or services, or for administrative

purposes, are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amounts do not differ materially from those that would be determined using fair values at the end of each reporting period.

Any revaluation increase arising on the revaluation of such land and buildings is recognised in other

comprehensive income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously expensed. A decrease in the carrying amount arising on the revaluation of such land and buildings is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued buildings is recognised in profit or loss. On the subsequent sale or

retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings.

Freehold land is not depreciated. Fixtures and equipment are stated at cost less accumulated depreciation and accumulated

impairment losses. Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land

and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis

as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

Depreciation is calculated on a straight-line basis to write off assets to their estimated residual values

over their anticipated useful lives as follows: - Buildings 25 years (4% p.a.) - Furniture and equipment 5 years (20% p.a.) - Computer equipment 3 years (33.3% p.a.) - Motor vehicles 4 years (25% p.a.)

65

ELECTRICITY CONTROL BOARD

11

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015 2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2.3 Retirement benefits

Contributions to retirement funds are charged against income in the year in which they become payable.

2.4 Provisions

Provisions for liabilities are recognised when the Board has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amount of the obligation.

2.5 Impairment of assets

At each reporting date, the Board reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, its carrying amount is reduced to its recoverable amount and the impairment losses are recognised as an expense immediately.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount but limited to the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised in the statement of comprehensive income.

2.6 Cash and cash equivalents

Cash and cash equivalents are measured at fair value and comprise cash on hand, deposits held on call with banks and investments in money market instruments, net of bank overdrafts and call loans. In the statement of financial position, bank overdrafts are included in current liabilities. Interest-bearing bank overdrafts and other short-term borrowings are recorded at the proceeds received, net of direct issue costs.

For the purpose of the statement of cash flows, the Board considers all bank balances and cash with

a maturity of less than one year and bank overdrafts to be cash and cash equivalents. 2.7 Financial instruments

Initial measurement Financial assets and financial liabilities are recognised on the statement of financial position when the Board has become a party to the contractual provisions of the instrument. Financial instruments carried on the statement of financial position include bank and cash balances, trade and other receivables and trade and other payables.

Subsequent measurement Fair values and the recognition methods of the different financial instruments are disclosed in the notes to the annual financial statements. Fair value represents an approximation of the year end value, which may differ from the value that will be finally realised. De-recognition Financial instruments are offset when the Board has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

66

ELECTRICITY CONTROL BOARD

12

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015 2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2.7 Financial instruments (continued) Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the statement of comprehensive income when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

2.8 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the rights and rewards of ownership to the lessee. All other leases are classified as operating leases and rentals are charged against trading profit as they become due.

The Board as a lessee Assets held under finance lease are recognised as assets of the Board at fair value at the date of acquisition. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the statement of comprehensive income over the term of the relevant lease so as to produce a constant periodic rate of interest on the remaining balance of the obligations for each period.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

3.1 Judgements by management

There were no material judgements made by management that could have a significant effect on the amounts recognised in the financial statements.

3.2 Key sources of estimation uncertainty There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that could have a significant risk of causing material adjustment to the carrying amounts of the assets and liabilities within the next financial year.

3.3 Trust Funds-Ministry of Mines and Energy Project The Board undertakes a project on behalf of the Ministry of Mines and Energy (“MME”). The funds received are accounted for as monies held in trust and all expenditure incurred on this project are accounted for separately from the Board’s transactions.

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ELECTRICITY CONTROL BOARD

13

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015

7. TAXATION The Board is exempt from income tax in terms of section 16(1) (e) (i) of the Namibian Income Tax Act.

2015 2014 N$ N$ 4. REVENUE Revenue comprises the following: - Levies income 55 750 998 47 697 984 - Licence fees 787 500 556 500 5.

SURPLUS / DEFICIT BEFORE TAXATION

56 538 498 48 254 484

Interest received 1 807 799 1 407 287

Insurance proceeds Loss on foreign exchange Gain on disposal of fixed assets

145 000 (9 327)

126 775

142 782 (18 930) 46 089

Expenditure: Auditor's remuneration: - audit fees - current year 120 780 133 458 - prior year 11 144 4 793 Depreciation 989 118 619 987 - land and buildings 359 228 359 228 - motor vehicles 350 874 72 430 - computer equipment 146 389 102 736 - furniture and equipment 132 627 85 593 Staff costs 25 755 604 18 432 645 Operating leases - office equipment 295 864 237 279 6. BOARD MEMBERS EMOLUMENTS - service members 331 571 334 426 - other services 44 416 162 361 375 987 496 787

6868

ELECTRICITY CONTROL BOARD

14

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015

8. PROPERTY, PLANT AND EQUIPMENT

Land & buildings

Motor Vehicles

Computer equipment

Furniture & equipment

Total

N$ N$ N$ N$ N$ 2015 Cost At 01 April 2014 7 864 965 1 749 010 680 806 1 343 731 11 638 512 Disposals

Revaluation - -

(570 649) -

(8 970) -

(17 797) -

(597 417) -

Additions - 1 350 800 310 456 351 726 2 012 982

At 31 March 2015 7 864 965 2 529 161 982 291 1 677 660 13 054 077

Accumulated depreciation At 01 April 2014 1 206 474 570 649 508 338 998 605 3 284 066 Disposals - (570 649) (5 731) (2 811) (579 191) Depreciation 359 228 350 874 146 389 132 627 989 118

At 31 March 2015 1 565 702 350 874 648 996 1 128 421 3 693 993

Net book value at 01 April 2014 6 658 491 1 178 361 172 468 345 126 8 354 446 Net book value at 31 March 2015 6 299 263 2 178 287 333 295 549 239 9 360 084

2014 Cost At 01 April 2013 7 864 965 761 362 580 723 1 168 527 10 375 577 Disposals

Revaluation - -

(190 712) -

(19 533) -

(71 539) -

(281 784) -

Additions - 1 178 360 119 616 246 743 1 544 719 At 31 March 2014 7 864 965 1 749 010 680 806 1 343 731 11 638 512

Accumulated depreciation At 01 April 2013 847 246 649 199 419 405 933 321 2 849 171 Disposals - (150 980) (13 803) (20 309) (185 092) Depreciation 359 228 72 430 102 736 85 593 619 987 At 31 March 2014 1 206 474 570 649 508 338 998 605 3 284 066

Net book value at 01 April 2013

7 017 719

112 163

161 318

235 206

7 526 406

Net book value at 31 March 2014 6 658 491 1 178 361 172 468 345 126 8 354 446

Land and buildings comprises Erf 714, on 8 Bismarck Street, Windhoek.

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ELECTRICITY CONTROL BOARD

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NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015

The Board’s main customer is Nampower, for which the credit terms are 30 days and no interest is charged on the trade receivable balance at year end. The Board, therefore, believes that the trade receivables are not impaired and the above provision for doubtful debt sufficiently covers the risk of default.

10. BANK BALANCES AND CASH 2015 2014

N$ N$ Cash on hand 3 000 66

Current accounts 8 357 060 28 643 834 Short-term investments 47 860 527 15 290 355 56 220 587 43 934 255

Restated

Restated 11. TRADE AND OTHER PAYABLES 2015 2014 2013

N$ N$ N$

Trade creditors 2 684 533 767 156 530 802 Accruals 7 178 354 6 315 474 4 250 286 9 862 887 7 082 630 4 781 088

The average credit period on purchases of goods is 30 days and no interest is charged on the trade payables balance as at year end. The Board has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

2015 2014 N$ N$ 9. TRADE AND OTHER RECEIVABLES Trade receivables 5 797 432 4 880 832 Sundry debtors 123 865 1 648 023 Staff loans and advances 7 333 - Provision for doubtful debt (90 000) (124 000)

5 838 630 6 404 855 Past due but not impaired Past due for 1 – 30 days - - Past due for 31 – 60 days - - Past due for 61 – 90 days - - Past due for more than 90 days 90 000 124 000

90 000 124 000 Movement in provision for doubtful debt

Balance at the beginning of the year 124 000 54 000 (Decrease)/Increase in provision recognised in comprehensive income.

(24 000)

70 000

Amounts written off during the year (10 000) -

90 000 124 000

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ELECTRICITY CONTROL BOARD

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NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015

13. RETIREMENT BENEFITS FOR EMPLOYEES

Retirement benefits are provided for employees through an

independent retirement fund known as Namflex Provident Fund. The retirement fund is governed by the Namibian Pension Funds Act and is a defined contribution plan. All permanent employees qualify for the retirement benefits. Current year contributions to retirement benefits amounted to N$ 2 161 866 (2014: N$ 1 358 830).

The total value of contributions to the fund during the year

amounted to:

Employee contributions 745 159 467 525 Employer contributions 1 416 707 6 315 474

2 161 866 7 082 630

891 305 6 315 474 1 358 830 7 082 630

According to Alexander Forbes, the value of the fund as at 31 March 2015 is N$ 9 918 272.

Restated Restated 2015 2014 2013 N$ N$ N$ 12. PRIOR PERIOD ERRORS

During the current year the board discovered that expenses for future project costs were incorrectly provided for in the prior years. The error has been rectified restrospectively and prior period restated.

The Board also discovered an error in the determination of the provision for performance bonus. The calculation of provision for bonus was based on the full year, instead of the months (five months) for which the employment services have been rendered as at reporting date. To ensure compliance with the criteria of IAS 37, the error has been rectified retrospectively and prior period restated.

The correction of the error(s) results in adjustment as follows:

Statement of Financial Position

Decrease in provision for Projects - 1 084 931 3 273 784

(Increase)/Decrease in provision for Bonus - (2 648) 1 646 764 Profit or loss Decrease/(increase) in provision for Projects - 1 084 941 3 273 784 Decrease/(increase) in provision for Bonus - (2 648) 1 646 764 - 1 082 283 4 920 548

2015 2014 N$ N$

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ELECTRICITY CONTROL BOARD

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NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015 14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

14.2 Interest rate management As part of the process of managing the Board’s interest rate risk, interest rate characteristics of new

borrowings and the refinancing of existing borrowings are positioned according to expected movements in interest rates. The Board currently has no exposure to interest rate risk as it does not have any interest bearing borrowings.

14.3 Credit risk management The Board only deposits cash surpluses with major banks and investment houses of high quality

credit standing.

At year-end the Board did not consider there to be any significant concentration of credit risk which has not been adequately provided for.

14.4 Liquidity risk management The Board has minimised its liquidity risk by ensuring adequate facilities and reserve borrowing

capacity. 14.5 Liquidity and interest risk tables

The table below summaries the Board’s exposure to liquidity and interest rate risk:

2015 Average

effective Interest rate

1-3 months

N$

3 months – 1 year

N$

1 – 5 years

N$

Total N$

Financial Assets Trade and other receivables 0% 5 838 630 - - 5 838 630 Bank balances and cash 3.61% 56 220 587 - - 56 220 587 62 059 217 - - 62 059 217 Financial Liabilities Trade and other payables 0% 9 862 887 - - 9 862 887 Trust funds 0% - - - - 9 862 887 - - 9 862 887

2015 2014 N$ N$ 14.1 Categories of financial instruments Financial assets Trade and other receivables 5 838 630 6 404 855 Bank balances and cash 56 220 587 43 934 255 62 059 217 50 339 110

Financial liabilities Trade and other payables 9 862 887 7 082 630 Liabilities at amortised cost 9 862 887 7 082 630

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NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015 14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) 14.5 Liquidity and interest risk tables (continued) 2014

Average effective

1-3 moths

3 months – 1 year

1-5 years

Total

Interest rate N$ N$ N$ N$ Financial Assets Trade and other receivables 0% 6 404 855 - - 6 404 855 Bank balances and cash 3.61% 43 934 255 - - 43 934 255 50 339 110 - - 50 339 110 Financial Liabilities Trade and other payables 0% 7 082 630 - - 7 082 630 Trust funds 0% - - - - 7 082 630 - - 7 082 630

Fair value The directors are of the opinion that the book value of financial instruments approximates their fair value, as the items are of a short-term nature.

14.6 Capital risk management

The Board manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders by ensuring that economic value is added throughout. The capital structure consists of accumulated funds and cash and cash equivalents.

14.7 Market risk management

The Board’s activities expose it primarily to the financial risks of changes in interest rates. Refer to note 14.2 for detail on how the Board manages interest rate risk. There has been no change to the Board’s exposure to market risks or the manner in which it manages and measures risk.

2015 2014 N$ N$ 15. COMMITMENTS

At the reporting date, the Board had outstanding lease commitments under non-cancellable operating lease for its office equipment, which fall due as follows;

Within one year 29 730 29 730 Within two to five years 22 119 51 849 51 849 81 579 As at year end, the Board made commitments to pay a total amount

of N$3,379 706 to various consultants in respect of professional services to be rendered on various projects.

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ELECTRICITY CONTROL BOARD

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NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 March 2015

16. RELATED PARTIES

The Board regards RERA, Government and other parastatals as

related parties. The following were the transactions entered into during the year:

Regional Electricity Regulator of Southern Africa (RERA) Subscription fees (membership)

Nampower (Levy income) (518 774)

55 750 998 (448 349)

47 697 984 55 232 224 47 249 635 Compensation of key management personnel Short-term benefits 5 000 330 8 970 421 Post-employment 489 743 472 459 5 490 073 9 442 880

17.

RECONCILIATION OF SURPLUS BEFORE TAXATION TO CASH UTILISED BY OPERATIONS

Surplus before taxation 9 945 488 13 190 214 Adjusted for: (Gain) / Loss on disposal of fixed assets (126 775) (46 089) Depreciation 989 118 619 987 Insurance proceeds - - Interest received (1 807 799) (1 407 287) 9 000 032 12 356 825 Working capital changes 3 346 483 (81 572) Increase / (decrease) in trade and other receivables 566 225 (2 383 114) Increase in trade and other payables 2 780 258 2 301 542

CASH RECEIVED FROM OPERATIONS 12 346 515 12 275 253

2015 2014 N$ N$

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ELECTRICITY CONTROL BOARD

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DETAILED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 31 March 2015 2015 2014 N$ N$ INCOME Levies received 55 750 998 47 697 984 Licence fees 787 500 556 500 Interest received 1 807 799 1 407 287 Other income 89 113 831 370

TOTAL INCOME 58 435 410 50 493 141 EXPENDITURE Advertising 688 316 309 906 Audit fees- current year - prior year

120 780 11 144

133 458 4 793

Provision for doubtful debt 132 325 70 000 Bank charges Bursaries

37 028 313 391

50 420 -

Computer expenses 109 662 63 553 Computer software expenses 161 524 189 273 Conference and seminar expenses 1 642 758 2 778 640 Depreciation 989 118 619 987 Members’ fees 375 987 496 787 Donations 267 768 276 566 Entertainment 433 433 215 513 Foreign exchange losses 9 327 18 930 Insurance 223 191 137 332 Legal and professional fees 1 059 409 1 439 819 Licences and permits 4 083 1 212 Light, heat and water 226 733 180 738 (Profit)/Loss on disposal of fixed assets (126 975) 96 693 Maintenance 376 476 406 379 Office expenses 194 228 117 769 Penalties - - Postage and couriers 7 669 17 327 Printing and stationary 392 258 318 852 Project costs 9 847 240 6 231 934 Recruitment and staff training 2 535 502 1 786 164 Reference and resource material - - Rent – equipment Rent - office

295 864 299 070

237 279 80 291

Salaries and other staff costs Staff welfare

25 755 604 119 450

18 432 645 -

Security services 164 476 109 861 Subscriptions 702 725 674 745 Subsistence and travelling – staff members 537 506 1 146 293 – Board members 150 939 224 781 Telephone and fax 274 265 218 298 Vehicle expenses 157 648 216 689 TOTAL EXPENDITURE 48 489 922 37 302 927 SURLPUS FOR THE YEAR 9 945 488 13 190 214 Other comprehensive income - - TOTAL COMPREHENSIVE SURPLUS FOR THE YEAR 9 945 488 13 190 214

75

Notes

76

Notes