- The Cabinet of the Government of the Republic of Namibia (GRN) has approved the entry into an agreement with Hyphen Hydrogen Energy (Hyphen) to govern the development, implementation and operation of sub-Saharan Africa’s largest, and its only fully vertically integrated, green hydrogen project.
- The transformative impact of this project on Namibia and its economy is considerable.
- The total project capital investment of US$10 billion is roughly equivalent to the country’s annual GDP.
- At full scale development, anticipated before the end of the decade, the project will produce 2 million tonnes of green ammonia annually for regional and global markets.
The pioneering Feasibility and Implementation Agreement (FIA) planned to be signed on 26 May 2023 governs the process under which Namibia’s first green hydrogen project will be realised, as a first step in the implementation of GRN’s broader green hydrogen strategy. With limited existing international precedent to draw upon, GRN and the inter-ministerial Green Hydrogen Council assembled a negotiations team which was supported by international advisors, to develop the FIA. GRN 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.
Under the FIA Hyphen is responsible for the technical, financial, environmental, social and commercial delivery of the project. GRN is 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. It is estimated that 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% of these jobs to be filled by Namibians and 20% by youths. The project is further targeting 30% local procurement of goods, services and materials during the construction and operational phases.
The project will generate significant income to the Namibian fiscus through the payment of land rentals, royalties on all project revenues and taxes. GRN also has an opportunity to be a co-investor in the project with the right to take up to a 24% equity interest at cost. Thanks to its partnership with the European Union and the Global Gateway Initiative, Namibia has mobilised donor and concessional funding from Invest International and the European Investment Bank of more than EUR540 million/ NAD 11.167 billion to finance the development of the green hydrogen industry and to fund its equity participation in the project, with additional support expected to be announced post the execution of the FIA.
GRN has mobilised more than €40 million to date to de-risk its equity investment in the project, associated infrastructure and future green hydrogen projects, additional support is expected to be announced post the execution of the FIA. Namibia is also working closely with its development partners to establish a dedicated program that will provide the requisite resources to coordinate the implementation of the Hyphen Hydrogen Energy Project and Namibia’s broader green hydrogen strategy. This program illustrates the multinational nature of this industry and the important role Namibia will play in decarbonizing global hard to abate sectors, while industrializing its own economy.
The approval of the FIA marks the commencement of Namibia’s transformative journey towards a thriving and sustainable future, putting Namibia 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.
Hyphen Hydrogen Energy Ltd is a Namibian registered green hydrogen development company, specifically formed to develop green hydrogen projects in Namibia for international, regional and domestic supply. Hyphen is a joint venture between Nicholas Holdings Limited and ENERTRAG SE.
Link to full FIA agreement HERE
Author: Bryan Groenendaal
