Namibia prepares green hydrogen roadmap, awards McKinsey oil sector consultancy job

Mines and Energy Minister Tom Alweendo says Namibia is currently developing a roadmap to develop the country’s green hydrogen sector.

He added that the government will likely have a stake in green hydrogen projects like the mandate in petroleum licences issued.

"The state will have a share of the Hypen project. We are currently negotiating where the state can have a stake in the production of green hydrogen, as to what level, negotiations are still ongoing and we have not come to a point to know how much it will be yet," said Alweendo.

The Energy minister, however, could not clarify if the government’s proposed stake in the Hypen project will become standard practice for future projects.

“I cannot pinpoint yet if this will be standard practice, as it may differ,” he said. “For example, if someone says, '' I want to come and produce green hydrogen in your country, I will ensure that all electrolysis required for production will be manufactured locally. This means he is not only bringing green hydrogen but also another business that is more beneficial to the country. If I want a free carried interest or to incentivize investors to manufacture in the country, I will choose the latter because what we really want is the maximum output for the country.”

Alweendo noted that the government was not only concerned about its shareholding in the projects, but also economic benefits to be realised from their implementation.

“The benefits are not always in the revenue produced but also in the additional economic spin offs brought by the process, which even if they can't be quantified, the repel effect is greater than the carried interest. Shareholding is not always a good thing as one only gains if they make a profit, if no profits are yield shareholding does not mean much because the state is rewarded for the equity based on the profit made," Alweendo said.

Meanwhile, Namibia has awarded global consultancy firm, McKinsey & Company, a tender consultancy to develop a regulatory framework that looks at how the country’s oil and gas sector can be developed and regulated.

"What we are working on is how to govern a new industry, green hydrogen, which we know cannot be regulated in the same way that petroleum is. The green hydrogen strategy, a road map that looks at how hydrogen will be developed, is being worked on and is expected to be completed this year. Within that strategy, it will also state that in order for you to produce this, we will need to amend the Energy Act or create a separate Hydrogen Act, and the assessment is ongoing to decide whether a new law is required based on what it indicates," explained Alweendo.

This comes as the country has ambitions to be one of Africa's first green hydrogen export hubs. The government is banking on green hydrogen to attract more than US$6 billion in foreign direct investment (FDI) which is anticipated to generate annual revenues more than US$800 million, while also contributing to its much-anticipated Sovereign Wealth Fund.

Last week Hyphen Hydrogen Energy (Hyphen), the preferred bidder to implement the country’s first green hydrogen project, has expressed optimism that the Namibian government will sign off an agreement before the year ends.

On the oil front, the country’ oil discoveries off the coast of Namibia by two oil majors are likely in the billions of barrels, with production expected in four years.

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Last modified on Thursday, 08 September 2022 17:24

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