Sun. Jul 21st, 2019

Namibia: Govt to Lease Out 7 Green Schemes

3 min read

The agriculture ministry says it will lease out seven of its 11 green schemes to the private sector after failing to sustain operations.

Agriculture ministry executive director Percy Misika told The Namibian on Thursday that Agribusdev was allowed to retain only four projects under its management.

Agribusdev is the custodian of the government green scheme under the ministry of agriculture.

It started operating in 2013 managing the 11 projects across the country, most of them concentrated in the Kavango East and West regions along the Okavango River.

The agency, Misika said, will manage the Shadikongoro, Uvhungu-Vhungu, Sikondo and Hardap green scheme projects.

Misika said projects of this magnitude require high inputs in terms of skills, technology, electricity and water.

“Electricity is the biggest driver of high operational costs at these projects, and there is no provision for this cost in our budget,” he said.

Misika, who gave an example of Etunda that was ravaged by the armyworm in 2017, said green schemes needed a large amount for recapitalisation, but the government did not have sufficient funds.

“If the private sector was running it, they could have gone to the banks and got funding immediately, but SoEs need government guarantees to get such funding. Such a guarantee is not there,” Misika explained.

The executive director also said Agribusdev management was told last year that any new green scheme project such as Liselo in the Zambezi region and the Neckartal Dam irrigation project should be rolled out under the Build-Operate-Transfer (BOT) model to reduce operational costs.

Two other projects are planned for the Kavango West and Oshikoto regions utilising the BOT system.

Last month, Agribusdev invited Namibian companies through an open national bid to take over the Orange River Irrigation Project (Orip) in the south of the country.

The project will also be leased out on a BOT model where the private operator will rent, operate and develop the farms for a certain period while recouping their investments before returning the scheme to the government.

The Orip was under the management of Cool Fresh Namibia through a profit-sharing agreement with the agriculture ministry, before it was taken over by Agribusdev in 2016.

At the beginning of this month, Agribusdev also placed an advert in the media inviting companies to tender for Ndonga Linena. The project was under the management of Oshikunino Trading Enterprise through a profit-sharing agreement with the agriculture ministry, but it was taken over by Agribusdev in 2016.

A source close to the matter said that even if Agribusdev remains with the four green schemes and leasing out the rest, they still will not have enough money to operate them.

“The company also received notification from NoRED, that they will cut off their power to most of their projects in Kavango and projects like Likondo were unable to pay the salaries of their employees,” the source said.

The ministry had a closed-door meeting with Agribusdev management last Friday to conclude the funding issue and the way forward on the green schemes, where the ministry stuck to its guns to have most of the projects leased out.

The source added that the meeting, however, failed to secure definite funding for the four remaining projects.

AGRIBUSDEV FUNDING

Agribusdev received N$96 million for the green schemes in the current financial year. Misika is, however, pessimistic about the allocation, noting that it will hardly make a dent in the operational costs of the green schemes.

He said the bulk of the budget would go towards the ongoing contracts of de-bushing and the fencing of the Liselo project in the Zambezi.

“We also have to pay for the ongoing work at Uvhungu-Vhungu and Mashare green schemes. And then if there are residue funds, we will give them to Agribusdev to fund the projects they have chosen. The government cannot embark on new projects right now if old projects are not functional,” Misika clarified.

According to documents The Namibian saw, after the armyworm outbreak at Etunda during the 2016-17 cropping period, Agribusdev needed about N$72,16 million to revive the project, and they only received N$7,7 million from the government.

Also, the agency requested N$51,4 million last year but was only allocated N$5,5 million. Agribusdev has been running the Etunda scheme since 2015.

It’s not only the Etunda project that the government has not been able to fund adequately; during 2015, the government allocated just N$5 million to Kalimbeza and nothing to the other eight schemes under Agribusdev at the time.

Source

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