NamPower asks for 8.4% more
For the 2026/27 financial year, NamPower has applied for a bulk tariff increase of 8.4%, increasing the average tariff from 206.11 cents per kilowatt-hour (c/kWh) to 223.40 c/kWh, the Electricity Control Board (ECB) of Namibia has announced.
According to the application, NamPower would, in principle, require a 30.4% tariff increase for 2026/27 to achieve cost reflectivity.
According to the ECB, NamPower recognises the importance of balancing tariff cost reflectivity with affordability.
“It is clear that an immediate increase of this magnitude would be unsustainable for Namibian customers and could have unintended consequences, ultimately undermining NamPower’s long-term national interest and financial position. Accordingly, NamPower has elected to apply for a more measured tariff increase that sets a clear trajectory towards cost-reflective tariffs. To achieve this, NamPower will defer under-recoveries as well as a significant portion of the return and depreciation,” reads the tariff increase application overview released by the regulator.
The ECB explains that the main factors affecting the price of electricity in Namibia include a USD:NAD exchange rate forecast of 16.33.
“This rate is significantly lower than both the application rate for FY2025 at 17.9 and the approved rate for FY2026 at 18.2,” the ECB points out.
US dollar import tariffs are also expected to increase in line with the US Producer Price Index at 3.4%, the ECB says. Furthermore, Eskom tariffs are projected to increase by 11%, while Ruacana output is assumed to be 1 435 GWh.
Additional local generation of 180 GWh from the Sores |Gaib PV plant and 195 GWh from the Diaz Wind plant, as well as Independent Power Producer (IPP) tariffs forecast to increase in line with inflation at 3.8%, are also contributing factors.
“The combination of these factors contributes 1.3% to the tariff increase,” the ECB says.
However, the ECB warns that “the widening gap between NamPower’s actual operating costs and the operating costs historically applied for and approved is a significant concern”.
“This issue has become even more urgent in light of the new multi-year tariff methodology that the ECB intends to implement from the 2028 financial year,” the regulator points out.
For the current tariff application, NamPower’s fixed operating expenditure budget for FY2027 has been used.
“Aligning the application with NamPower’s internal budget brings the proposed tariff for fixed operational costs closer to cost-reflective levels. This alignment is an essential component for the successful implementation of the new tariff methodology, the performance management framework, and the long-term financial sustainability of NamPower,” the ECB elaborates.
“Due to the historically understated operational costs allowed relative to actual expenditure, fixed operational costs now represent a substantial portion of the FY2027 application, accounting for 6.5%,” according to the regulator.
Another significant contributor to the tariff increase is return and depreciation at 8.14%.
According to the ECB, return and depreciation represent the cost of financing capital expenditure, for example for infrastructure expansion, specifically transmission lines, substations and power stations.
“This increase is due to the capitalisation of generation assets which are expected to be completed by or during FY2027,” the ECB says. For transmission assets, this also includes assets currently under construction.
Notable contributions to the increase in return and depreciation include N$456 million for the Omburu BESS project, N$1.49 billion for the Sores |Gaib PV power plant, capital additions to existing power stations costing N$167 million, and transmission lines and substations including the 400 kV Auas–Kokerboom line and substation costing N$1 billion.
Other projects include the Otjikoto–Masivi line and substation at N$495 million, and the High-Voltage Direct Current (HVDC) earth electrode stations costing N$292 million.
Although NamPower recorded an over-recovery of N$303 million for FY2025, the accumulated under-recoveries and deferred revenue have resulted in a net under-recovery for FY2027, the ECB elaborates.
