The victor of the next election will be in charge of making sure that massive solar, gas, and oil projects can begin development.
Following the passing of President Hage Geingob on February 4, Namibia is getting ready for elections at the end of the year. As they work to develop a number of massive oil and gas projects and green hydrogen schemes, energy investors are keeping a close eye on these initiatives.
After Geingob’s cancer-related death, Namibia received international recognition for the orderly and peaceful handover of power to former vice president Nangolo Mbumba.
However, Mbumba is effectively a caretaker. The 82-year-old will serve the remainder of Geingob’s term, which expires in March 2025, but will not contest November’s election to choose a permanent successor. Instead, newly appointed vice president Netumbo Nandi-Ndaitwah will be the flagbearer for the ruling SWAPO party and is the overwhelming favourite to triumph in the polls.
The stability and relatively pro-business stance maintained by the late President Geingob was a key factor in attracting major energy players to Namibia. It is not a foregone conclusion, however, that Nandi-Ndaitwah will follow the same approach if elected.
“The question that is troubling investors is the election and the likely winner,” says Graham Hopwood, executive director of the Institute for Public Policy Research, a Windhoek-based think tank. “Very little is known about her attitudes to investment in general and key developing sectors like green hydrogen and oil and gas.”
Development risks
Vast quantities of oil and gas were discovered offshore during Geingob’s presidency, with international oil companies Shell and TotalEnergies both announcing massive deepwater finds in 2022.
But finding oil and gas is one thing; bringing these resources into production is another. The government will need to introduce multiple regulations covering technically complex subjects and negotiate various agreements with the relevant companies. The companies themselves will need to assess the commercial viability of production, before securing finance and striking offtake agreements. Experience from other African countries shows this is likely to be a years-long process.
In Mozambique, for example, Italian oil and gas giant Eni began commercial gas production in 2022 – 11 years after its initial discovery. Two larger gas projects in the country are still being developed. In Uganda, meanwhile, oil discoveries were announced in 2006 – but exports are not slated to begin until next year at the earliest.
The timeline for green hydrogen production could be somewhat shorter. Hyphen Hydrogen Energy, which is spearheading a $10bn project in the country, aims to start production as early as 2028.
Toni Beukes, the company’s head of ESG (environment, social and governance), says that she is “not at all” concerned by the prospect of political uncertainty. “There’s no history or precedent in the country where a contract concluded by the Namibian government was not honoured by a later government,” she points out. Beukes adds that government officials have put in a “vast amount of work” to lay the foundations of a green hydrogen industry in the country, including work on building international partnerships with potential funders and offtakers.
It may seem unlikely that Nandi-Ndaitwah would backtrack on the progress that has already been made in the green hydrogen sector. But the government will have its work cut out to complete the regulatory framework for the industry, while simultaneously undertaking the regulatory groundwork for the offshore oil and gas sector.
Source: Africa Business
