Implementing a client-focused, tech-empowered approach, PwC Namibia provides core audit, risk assurance and tax services to a range of government and private sector clients, as the country seeks to gain more clarity on renewable and hydrogen tax and legal frameworks. Energy Capital & Power spoke with Country Senior Partner Chantell Husselmann about the viability of upcoming renewable and green hydrogen projects, as well as the importance of tax policy reforms, legislation and stakeholder engagement in maintaining Namibia’s investment momentum.
What services does PwC provide to its clients in Namibia?
At PwC, our strategic intent is to create value for our clients and to bring a competitive advantage to their activities. Specifically in Namibia’s mining and energy sectors, we are well positioned for the provision of core audit and risk assurance services, as well as being external auditor to many existing mines. We also offer internal audit services from advisory and consulting perspectives, forensic audit services and HR consulting services. With that comes a lot of opportunity for us for our non-audit clients in the industry, extending our service delivery to tax compliance and consulting services. We are supported as part of the PwC Africa network by experts in the field, with many more areas of specialization and industry expertise. That is one of the benefits of having a footprint in Namibia – we can bring experts onboard to meet client needs.
What challenges do your clients face in navigating the current regulatory environment?
There are challenges where we have policy reforms that are in draft format for a long time. That brings uncertainty for future growth and business planning, along with bringing on board foreign ownership and attracting foreign investment. For example, in tax policy, we lack legislation in renewable energy. We have the Petroleum Taxation Act 3 of 1991, which speaks to the oil and gas sector, but not to renewables. There are conversations around clean hydrogen, but there is still a gap, which impacts building a business model and the underlying assumptions into that model to assess the feasibility of a given project.
What is your outlook on the viability of large-scale renewable energy and hydrogen projects in the country?
I see a lot of opportunity in terms of projects of scale in Namibia, considering the local investment they will require and levels of employment they will create. The Southern Corridor Development Initiative, for example, is an area where developing a project of this scale is needed to uplift local communities. That’s why tax policy reforms and legislation in the industry are important, as is the pace of stakeholder engagement. The country is phasing out incentives it has had for years, such as our manufacturing allowance and incentives on export processing zones. There is a lot of uncertainty about replacement and the amendment of a special economic zone with legislation not yet in place. Foreign investors might run into the situation of being registered under a tax regime that doesn’t yet have the benefits or support in making the significant investment viable.
How does PwC help foreign energy and utility companies resolve critical issues related to their sector?
It is our experience that the interest of doing business in Namibia first starts as a tax conversation – with setting up a branch or subsidiary in the country, as an example. We provide guidance and support on the best route, and highlight uncertainties where there is a lack of legislation. We are limited at times by not having recent tax practice notes guiding taxpayers on ambiguous matters. This aside, in order to meet the expectations of our clients, foreign investors and regulators, we need to lead the way – setting the course to a future that will look very different from today – a conversation in which we are proud to play a part.
Following a string of recent offshore discoveries, what prospects does hydrocarbon development hold for Namibia?
In terms of opportunity for the country, it is significant and could impact the entire state revenue composition. Currently, more than 50% of state revenues come from indirect taxes, 26% from employee taxes and 14% from mining taxes, and then a bit of non-tax revenue. We could see that change with the prospects of potential increased royalty income, as well as how the government can structure agreements with foreign investors in this space.
Furthermore, a lot of external specialists would be required, so it is important that our immigration laws take that into account to support new industries.
Energy Capital & Power is a strategic partner of the Namibia International Energy Conference (NIEC) – taking place in Windhoek on April 23-25, 2024. The 6th annual conference unites industry leaders, business executives and policymakers to engage in dialogue, exchange ideas, create new partnerships and identify strategies to foster a prosperous energy industry in Namibia and beyond. For more information, please visit https://www.nieconference.com/
