Africa-Press – Namibia. THE Namibia Power Corporation (NamPower) has made a profit of N$1,2 billion for the 2021 financial year. Not all of it is real money though.
Pushing up that profit is a N$1,3 billion unrealised gain relating to a power purchase agreement (PPA). That gain allowed a net fair value gain of N$1,1 billion to be run through the profit and loss, masking the not-so-solid performance.
The company is not even paying a dividend for the 2021 financial year, despite the massive profit. This is the explanation – the utility’s overall group revenue has dipped from N$6,8 billion to N$6,5 billion in 2021, and the cost of electricity has shot up with some N$200 million to reach N$4,4 billion.
This has already eaten into the profit. And not just that, but other key expenditures, such as employee costs, have also shot up, now reaching N$996 million. So has depreciation, which, when tallied with the recognised impairment, has the company bleeding almost N$1 billion.
Without the N$1,3 billion gain, NamPower would have made an operational loss – as it did in 2020 when a loss of N$278 million was recognised from operations. In 2020, despite the loss, the company was lifted to a profit by finance income which came in at N$787 million.
For the 2021 financial year, that finance income sits at N$600 million, leading to a profit before tax of N$1,6 billion, and a recognition of a N$437 million tax expense. For the 2020 financial year, profit before tax was only N$358 million, and the tax expense on this was N$34 million.
Despite this not so operational performance, the company continues to provide uninterrupted electricity without any load-shedding as experienced south of the Orange River.
According to a management statement accompanying the release of the financial statements, the coronavirus pandemic has adversely affected the operations of the company as the demand for electricity over the past three years has dropped.
Second to that, low rainfalls have reduced the national utility’s ability to generate sufficient hydropower. To make up for this, the company said it has optimised the balancing of the energy mix by sourcing from the Southern African Power Pool.
According to the company this was the main reason for the unrealised gain. Simson Haulofu, the company’s chief executive officer, said he has his fingers crossed for an average growth of 0,8% during the current financial year ending in June.
The released financial statements have been widely celebrated, with the minister of public enterprises, Leon Jooste, saying the power utility’s performance is exemplary.
NamPower boasts a balance sheet worth N$45 billion, a massive increase of N$10 billion from the N$38,8 billion recorded for 2020. This increase is not attributed to any new assets the company has invested in, but largely to a revaluation on physical assets, involving N$31 billion.
The company’s biggest assets include its N$21 billion transmission and distribution systems, as well as the Ruacana Power Station, which stands at N$6,8 billion.
Cash in the bank at the end of June 2021 was N$3,8 billion, with N$2,6 billion sitting in money market accounts. On the opposite, the company has an equity balance of N$31 billion, and N$14 billion worth of liabilities.
The tax future of NamPower does not look promising as the company has amassed a deferred tax liability of a whopping N$9 billion. The debt portfolio looks slim, dipping some N$200 million from N$737 million to N$516 million in the financial year under review.
The company generates the bulk of its revenue from Namibia (N$5,9 billion), and the rest from Angola (N$188 million), Botswana (N$84 million), South Africa (N$10 million) and the SAPP (N$351 million).
No dividend was declared for the 2021 financial year. The full financial statements and annual report are available on the company’s website.
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