Addressing Financial Strain: Namibia power tariff hike: Critical 2024 debt solution
Namibia’s state-owned utility, NamPower, is confronting a severe liquidity crisis driven by an escalating mountain of unpaid electricity bills, which has compelled it to seek a significant tariff increase for the 2026/27 financial year. As of December 2025, the total debt owed to the utility had ballooned to N$912 million. This figure includes substantial arrears from major clients, with municipalities like Mariental and Gobabis owing N$233 million and N$70 million, respectively. The problem is chronic, with debts overdue by more than 90 days averaging around N$700 million for the past six years and showing an upward trend.
A Calculated Tariff Request to Solve Debt Issues
In response, NamPower has formally applied to the Electricity Control Board (ECB) for an 8.4% bulk tariff increase, which would adjust the rate from N$2.16 to N$2.23 per kilowatt-hour. This request is a carefully considered measure to balance the utility’s urgent financial needs against the economic impact on consumers. While the proposed hike is crucial for sustainability, it falls significantly short of the 30.4% increase NamPower calculates would be necessary for a fully cost-reflective tariff. This gap highlights the delicate position of the utility as it navigates operational solvency and public affordability.
Debt Jeopardizes Operations and Renewable Energy Ambitions
The persistent non-payment directly threatens NamPower’s ability to function and invest in the nation’s energy future. With energy purchases from independent power producers and its own stations accounting for 63% of its expenses, the revenue shortfall makes it increasingly difficult to pay suppliers. This financial instability casts a dark shadow over critical infrastructure projects essential for meeting Namibia’s projected 2% annual growth in electricity demand. Key initiatives at risk include the N$1 billion Auas-Kokerboom transmission line, the N$456 million Omburu Battery Energy Storage System, vital upgrades to the Ruacana hydropower station, and the development of new solar plants.
Economist Klaus Schade warns that such debts can increase borrowing requirements, reduce profits, and lead to delays in crucial investments. The situation is so critical that the ECB has indicated it may begin linking future tariff approvals to improved payment discipline among customers, treating persistent debt as a compliance issue under the Electricity Act. This debt crisis not only endangers current stability but also hampers the replication of successful renewable projects like the 20MW Omburu Solar PV plant, which was financed by the Long Run Marginal Cost (LRMC) fund and stands as Namibia’s cheapest energy source.
Sources
- Namibia: Nampower Struggles With N$912 Million Debt – allAfrica.com
- NamPower TARIFF APPROVAL FOR THE FINANCIAL PERIOD …
- The Namibia Power Corporation (NamPower) says it is struggling to …
- NBC Digital News | WATCH BUSINESS TODAY – Instagram
- NamPower warns N$700 million in unpaid bills threatens finances
