The Namibian government has approved its 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) set to be signed on May 26 governs the process under which Namibia’s first green hydrogen project will be realized as a first step in the implementation of the country’s broader green hydrogen strategy.
With limited existing international precedent to draw upon, Namibia and the inter-ministerial Green Hydrogen Council assembled a negotiations team that was supported by international advisers to develop the FIA.
Namibia 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. And Namibia 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 the country’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. The country 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 mobilized donor and concessional funding from Invest International and the European Investment Bank of more than €540 million (US$581.4 million) 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.
Namibia has mobilized 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.
The country is also working closely with its development partners to establish a dedicated programme that will provide the requisite resources to coordinate the implementation of the Hyphen Hydrogen Energy Project and Namibia’s broader green hydrogen strategy. This programme 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 hopefully empowering the country to build a greener, more resilient future.
Hyphen Hydrogen Energy, a joint venture between Nicholas Holdings and ENERTRAG SE, is a Namibian registered green hydrogen development company, specifically formed to develop green hydrogen projects in the country for international, regional and domestic supply.