The Economy watch
Namibian Low Oil Prices and Water Scarcity

Klaus Schade, IPPR Research Associate

The event attracted good interest, with the seminar room at the House of Democracy filling to capacity for the crowd of fifty-three that gathered. Mr. Schade outlined how the world’s supply is currently exceeding demand, with Saudi Arabia trying to control oil prices. Their stance now is a willingness to no longer lose market shares and fiercely battle emerging oil producers around the world.  This has seen it increase its own production as a result.

Mr. Schade outlined that the largest oil reserves are still the highest in the Middle-East, with Latin America also an area of large deposits. Africa represents about 100 billion barrels, which are mostly located in Libya and Nigeria. Angola and the Sudan have smaller, yet noticeable amounts he noted. 

Participants

The amount of oil rigs worldwide are decreasing in number. An example noted by Mr. Schade was that in 2016 there are approximately five-hundred oil rigs in the U.S.A, while five to six years ago there were over two-thousand. This doesn’t necessarily affect production however, as smaller rigs are being consolidated into larger, more efficient models.

Oil prices are currently at 48 US$ per barrel, with exchange rate having had an impact on oil and fuel prices. Decline in prices have been smaller in the Namibian dollar than with the US dollar. There has been agreement that there is high potential for oil and gas to be found in Namibia, but the appetite for finding it from the major industry players is not really there.

The result of Angola’s oil industry has resulted in a consolidation of its citizens within its borders, and therefore less Angolans are venturing south to Namibia. This has had a knock-on effect on Namibia’s economy, as their citizens are consumers within the Namibian economy, with many being students over long periods of time.

Dietrich Remmert presenting on water scarcity

The second part of the event included a presentation titled ‘Namibia’s Water Situation: Insights & Thoughts’ by Mr. Dietrich Remmert on the current water situation in Namibia and the precarious situation it finds itself in of freshwater scarcity. He highlighted how Namibia is facing a creeping yet increasingly precarious situation, with estimated demand for water to outstrip sustainable supply before or by 2025. The biggest demand increases are centred around irrigation, urban areas & tourism.

Mr. Remmert pointed to Namibia’s set of good, complex and ambitious policies, laws and regulations that unfortunately have not all been implemented or only partially so. There has been a loss of technical expertise with many experts entering the private sector as consultants in a non-implementation role.  Another concern is the capacity from water sector institutions. 

Participant during the Q&A

There is an overall lack of investment in capital water infrastructure projects and maintenance backlog, with N$1.5-N$2 billion having been quoted for Windhoek as the required amount to improve current water structures.  While Mr. Remmert pointed out these were observations to be taken forward, he did offer solutions to the problems he had expressed. He encouraged the necessity to enact Water Act 2013 and to improve the IWRM plan. He also pointed to the need for a water advisory council, a water regulator and basin committees.

Along with these points, he further pointed to the need to realistically explore financial options and Public Private Partnerships (PPPs) with care. Making provisions for and fast-tracking financing to projects such as Windhoek’s water infrastructure rather than waiting for such ventures as PPPs are a short-term imperative of government so as to ensure Namibia solves the water crisis in the short term, and not wait to find out its full extent.

The moderator Mr. Hopwood thanked the large crowd of over fifty people that attended the event and who took a keen interest through their questions and points. He encouraged all those attending to come to the next Economy Watch event which will take place in July, with the final date still to be confirmed.