Namcor licking wounds, but confident of healing

A cocktail of challenges, compounded by a N$700 million loss for the financial year ended 31 March, has left the National Petroleum Corporation of Namibia (Namcor) in a delicate situation.

Namcor owes its international fuel trade creditors about N$1.9 billion and faces a threat to its continued existence.

Acting managing director Shiwana Ndeunyema called a packed press event yesterday to explain the situation and the company’s appeal to the government for help.

The threat stems from the April suspension of the fuel levy of 7.6 cents per litre, which Namcor has enjoyed since 2010.

Ndeunyema, however, added that the 2022 financial year was very difficult for Namcor, specifically due to a loss of N$700 million recorded on 31 March at the end of the financial year. On that date, Namcor already owed its international fuel sources about N$2.5 billion.

Violations of internal controls and unexpected currency and international fuel price changes contributed to the purchase of fuel at prices above the regulated local selling prices, he said.

Violations

With bulk customers buying fuel from Namcor on contract, business-to-business supply agreements, re-export obligations and supply to its own and other long-term retailers, losses were already noted by the Namcor board last year.

The situation was exacerbated by Namcor's use of working capital to fund its aggressive gas station expansion. This left even less for the purchase of fuel, and still delivered only 16 out of a required 33 petrol stations, with three more currently under construction.

Board chairperson Jennifer Comalie said there was a significant increase in losses early this year, upon which the council decided to launch an investigation in late April or early May.

Several months later, the investigation report has been handed over to the board, and according to her, it identifies the violations.

The board is currently considering how to hold the officials involved accountable. The cause of the loss-making purchases was partly due to these violations, partly deliberate and partly due to a lack of understanding of how to reduce the risks of buying fuel on the international market, she said.

Save Namcor

Over the past months, Namcor has been working to pay off its debt and ensure the oil company can still import fuel, Ndeunyema said. A fixed-term agreement with one of its important international fuel suppliers was concluded to create time for the government to step in, he elaborated.

According to Comalie, the government and the ministry of mines and energy were approached to offer either capital for operating costs, a guarantee or a combination of the two to save Namcor.

Meanwhile, Ndeunyema insisted that Namcor's operations in the oil exploration and production industry are progressing significantly, with the company boasting assets worth N$7 billion. Comalie elaborated on an agreement with Angola’s national oil company Sonangol for a share in oil block 1 506. Namcor paid its obligated US$10 million (about N$186 million at yesterday’s exchange rate) on time, and another US$6.7 million (about N$124.7 million) on behalf of another partner in the agreement, which has since been repaid, she said.

However, not everything required has been paid to date, nor has Sonangol fulfilled all its obligations in terms of consent and regulations. The parties have agreed to postpone the deadline, she noted, but could not publicly disclose the new due date.