Cabinet approves N$200 billion agreement to develop Green Hydrogen Project

Niël Terblanché

The Government of the Republic of Namibia officially approved the country’s entry into a pioneering N$200 billion agreement to develop Sub-Saharan Africa’s Largest Green Hydrogen Project with Hyphen Hydrogen Energy Namibia.

The Namibian Cabinet took this landmark decision on Wednesday.

The feasibility and implementation agreement will be officially signed today.

According to a statement released by the Namibian Presidency, the transformative impact of this project on Namibia and its economy will be considerable.

The project will create up to 15 000 new jobs during the construction phase, 3 000 permanent jobs during its operation, with the target for 90 percent of these jobs to be filled by Namibians.

The total project capital investment is roughly equivalent to the country’s annual Gross Domestic Product. At full-scale development, anticipated before the end of the decade, the project will produce two million tonnes of green ammonia annually for regional and global markets.

The pioneering Feasibility and Implementation Agreement (FIA) will govern the process under which Namibia’s first green hydrogen project will be realised, as a first step in the implementation of the broader green hydrogen strategy.

With limited existing international precedent to draw upon, the government and the inter-ministerial Green Hydrogen Council assembled a negotiations team which was supported by international advisors, to develop the FIA.

“The government and Hyphen believe that the FIA will set a new global benchmark, creating a template for the sustainable and equitable development of other green hydrogen projects,” the statement reads.

President Hage Geingob said the feasibility of incubating a synthetic fuels industry in Namibia, as a key transforming agent of Namibia’s economy.

“On Friday the 26th of May 2023, we earnestly embark on that journey, as we kick start a process that has the potential to transform the lives of many in our country, the region and indeed the world,” he said.

Ursula Von Der Leyen, the president of the European Commission, said: “Namibia has the potential to become one of the main renewable energy hubs on the African continent and even worldwide”.

The EU president said the agreement is a major step for the production of green hydrogen.

“I am proud that Global Gateway allows the EU and Namibia to invest in a shared future fighting climate change together, making Namibia energy-independent and creating jobs and prosperity,” she said.

Obeth Kandjoze, the Chairman of the Namibian Green Hydrogen Council and Director General of the National Planning Commission said: “We are honoured by the trust and confidence exhibited by Hyphen and the global community, for choosing to build such a catalytic project in Namibia. This project is strategic in its potential to create employment in Namibia, reduce regional energy insecurity and help combat climate change by decarbonizing hard-to-abate sectors globally. The Government of the Republic of Namibia is resolute in its unwavering commitment to realise the potential of this transformative strategic bet”.

Marco Raffinetti, Chief Executive Officer of Hyphen Hydrogen Energy, said: “We are delighted to have concluded the FIA and look forward to delivering on the next phase of development of this ground-breaking project. On behalf of Hyphen, I would like to thank the Government for its unwavering support and relentless commitment to unlocking Namibia’s green hydrogen potential. We are confident in our ability to work hand in hand with the people of Namibian to drive lasting change through economic development and job creation, whilst paving the way for a greener and brighter future.”

Under the FIA Hyphen will be responsible for the technical, financial, environmental, social and commercial delivery of the project while the Namibian Government will be responsible for providing the land on which the project will be established and developing and implementing the required legal, fiscal and regulatory environment necessary for the establishment and sustainable operation of Namibia’s green hydrogen industry.

“At the heart of the FIA is the commitment to the socio-economic development of Namibia, through job creation and local procurement,” the statement reads.

The project is further targeting 30 percent local procurement of goods, services and materials during the construction and operational phases.

The project will generate significant income for the Namibian fiscus through the payment of land rentals, royalties on all project revenues and taxes.

The government also has an opportunity to be a co-investor in the project with the right to take up to a 24 percent equity interest at cost.

The approval of the FIA marks the commencement of Namibia’s transformative journey towards a thriving and sustainable future, putting the country on the map as a global hub for clean energy innovation and will empower the country to build a greener, more resilient future for generations to come.

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