11 Nov 2022
Namibia has secured huge sums in loans and grants at the start of the international climate summit (Conference of Parties 27 – COP 27) in Egypt, to develop its green hydrogen industry. At the same time Namibia launched a new financing platform and signed a new economic agreement with the EU.
The Namibian government obtained a 500 million Euro concessional loan (about N$9 billion) from the European Investment Bank (EIB), of which the details still have to be negotiated. A further 5 million Euros (about N$90 million) loan from the EIB to the government still has to be specified. The company Investment International provided 40 million Euros (about N$767 million) for green hydrogen development to the government.
The company Hyphen Energy, the preferred bidder of the Namibian government to construct the first green hydrogen park in southern Namibia, received 35 million Euros (about N$648 million) altogether.
Namibia launched “SDG Namibia One”, a new investment platform that will convene and coordinate activities related to the transition to, and exploitation of, green hydrogen industry in the country. The use of green hydrogen is the centre pillar for the transition of the domestic energy mix, as well as being an export commodity is a priority for the country.
The “SDG Namibia One” is a partnership between Climate Fund Managers, Invest International, and the Environmental Investment Fund of Namibia, (EIF).
Climate Fund Managers is owned by the Dutch Development Bank and Sanlam Infraworks, while Invest International is a financing institution owned by the Dutch Ministry of Finance.
A funding agreement for an initial development capital of 40 million Euros (about (N$700 million) was signed between the Namibian government and the Dutch government during the launch
This grant will catalyse additional development capital to “SDG Namibia One”. This will facilitate further investments.
“SDG Namibia One is therefore a blended finance solution to address such challenges, and as such aims to mobilise up to one billion Euros (about N$17,5 billion) of investment capacity over the next 10 months,” the Namibian government stated.
The green hydrogen development is set to transform the economic structure of Namibia through foreign currency earnings as an equity, but most importantly offering new government revenue streams through royalties and taxes, among others. The industry also offers huge employment opportunities for Namibians, ultimately addressing poverty and other socio-economic challenges.
“Despite this great opportunity for Namibia, we recognise that the green hydrogen industry is in its infancy, and it is difficult to predict how the market will develop in the long term and that we will face challenges relating to finance, technical capacity, and many others still to be unforeseen,” the Namibian government said.
"However, we will work closely with our international partners to mitigate such risks, hence a blended finance in the form of SDG Namibia One was launched with the premise to attract a diverse group of players in our development journey.”
President Hage Geingob personally signed a new partnership agreement with the EU Commission for critical metals like lithium, cobalt and graphite, the EU member states are keen to import from Namibia.
“This is a new beginning and a new chapter for the Namibian economy and the welfare of our people” President Hage Geingob said during the signing ceremony.
EU-Commission president Ursula von der Leyen noted that she was very glad the deal was signed with Namibia.
“This enables the development of value chains for raw materials and renewable hydrogen. This partnership agreement is a key step in strengthening relations between the EU and Namibia, based on mutual trust, deepened political dialogue and concrete cooperation projects.
Within six months from the date of the signing ceremony the EU and Namibia will produce a roadmap for this partnership for the value chain development of the above mentioned critical metals, some of these activities are planned to happen in Namibia.
In his speech at the climate summit, President Hage Geingob urged developed countries to financially support developing nations to mitigate the effects of climate change.
"Regrettably, only 23 million US dollars have been pledged so far to the Green Climate Fund," Geingob said.
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