Namibia finalizing Green Hydrogen tax regime

According to James Mnyupe, the commissioner for green hydrogen, Namibia is anticipated to complete a tax structure for its expanding green hydrogen sector by the end of the year.

Given that President Hage Geingob has indicated that the implementation agreement for the anticipated N$170 billion Hyphen Hydrogen Energy project is slated to commence in the first quarter of this year, the tax regime will be a key factor in determining how many participants in the industry will pay.

According to Mnyupe, The Brief, the nation has finished a benchmarking study that will help officials choose a new hydrogen tax structure. “We have explored a range of concepts with developers and looked into a range of global scenarios. We’ll probably settle these difficulties this year, he remarked.

The Synthetic Fuels Act, which, once it is passed, would control everything linked to green hydrogen and other synthetic fuels, according to the Green Hydrogen Commissioner, will include regulations governing taxation surrounding green hydrogen.

“This will probably be covered under the proposed Synthetic Fuels Act. However, we must first complete the policy before presenting the Bill to Parliament, going through the required legislative procedures, and consulting with the different important stakeholders, Mnyupe said.

To put things in perspective, Namibia levies a corporate tax rate of 37.5% on non-diamond mining operations, 55% on diamond mining operations, 10% on rough diamonds, and 5% on oil and gas. Additionally, the government has increased the corporation tax rate on oil and gas companies to 35%.

Namibia has already begun implementing its Synthetic Fuels Strategy, which will create a suitable and functional structure to develop the green hydrogen industry. The structure that is envisioned will be in charge of organizing, acquiring, and overseeing future green hydrogen projects built on state-owned property.

In November 2021, the government chose Hyphen Hydrogen Energy, a partnership between Nicholas Holdings of the UK and ENERTRAG of Germany, as the preferred bidder for the nation’s first green hydrogen project.

By the end of the decade, the proposed plant will produce 350,000 tonnes of green hydrogen annually for local and international markets, using 5–6 gigawatts of renewable generation capacity and 3 gigawatts of electrolyzer capacity, and reducing 5–6 million tonnes of carbon dioxide emissions annually.

Hyphen expects the first phase of its 125,000 tonnes per year of green hydrogen generation to start operating at the end of 2026.

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