Namcor confesses its sins

National oil company Namcor has admitted to a deepening financial crisis triggered by years of alleged mismanagement, operational weaknesses, and excessive risk-taking – resulting in staggering losses of N$1.3 billion in 2023 alone.In a lengthy statement issued Sunday, the state-owned oil company said it was compelled to set the record straight amid what it described as “misleading, inaccurate or... misrepresentations” in recent media reports. The statement pulls back the curtain on five years of governance failures that have pushed the company to the brink of collapse.Namcor’s financial data paints a troubling picture. Despite growing revenue nearly twelvefold – from N$610 million in 2017/18 to N$7.4 billion in 2022/23 – the company ended the 2022/23 financial year with a massive N$1.3 billion loss.“These losses were predominantly driven by Namcor Trading, which engaged in high-volume transactions that failed to generate sufficient margins,” the statement reads.At its peak in March 2024, Namcor’s total debt had ballooned to N$3.3 billion, largely due to over-purchasing petroleum products beyond market demand and securing expensive credit arrangements with suppliers.Government bailoutsThe company’s liquidity crunch prompted the government to step in with a N$1.2 billion bailout in April 2024. This allowed Namcor to pay down a chunk of its debt – including N$500 million to its largest creditor – reducing overall debt to N$2.1 billion. Further austerity measures have since slashed liabilities to N$1.6 billion.Still, Namcor faces an uphill battle, with N$800 million still owed under a restrictive supply agreement expiring in September 2025, and a further N$800 million owed to other creditors. The company warned that the supply agreement is subject to high interest rates, which means a significant portion of repayments continues to be absorbed by interest charges rather than reducing the actual debt.Namcor acknowledged a catalogue of internal missteps. One of the most damaging involved the unprocedural extension of credit to customers beyond limits allowed under the company’s governance framework. By March 2024, overdue trade debts had reached N$841 million. Several of these customers defaulted, compounding pressure on Namcor’s financial position. Legal action has been taken to recover the money, and the company has already secured provisional liquidation orders against some principal debtors. The matter remains before court.The company is also dealing with allegations of theft and significant stock losses at the national oil storage facility at Walvis Bay, which Namcor operates on behalf of the ministry of mines and energy. Internal investigations uncovered poor stock management and control, manual overrides of automated systems, and interference with metering systems, all of which contributed to the losses.Namcor also revealed that a N$53.2 million asset acquisition was carried out without board approval and outside of governance procedures. The transaction has since been declared unlawful and nullified, with legal steps underway to recover the money and hold those involved accountable.The oil storage facility, which began operations in 2021, has yet to yield a profit. Hosting and pipeline usage fees have been set below market rates, making it impossible for Namcor to break even. A fee structure review is currently underway in collaboration with the ministry, with new tariffs expected to be gazetted in late 2024. The company anticipates profitability will improve after the decommissioning of the old jetty and full migration to the new oil storage facility jetty by the end of 2025.Another major failure was the procurement of a non-functional enterprise resource planning (ERP) system. Initially budgeted at N$25 million, costs spiralled to more than N$68 million – and yet the system remains not fully operational.Clarifying the Mulunga arbitrationNamcor also addressed public misconceptions surrounding the arbitration matter involving its former managing director, Immanuel Mulunga. The company strongly refuted reports suggesting Mulunga had won an unfair dismissal case.“It has been erroneously reported... that ‘Immanuel Mulunga has won an unfair dismissal labour case’... This is a gross misrepresentation,” Namcor stated.According to the company, the arbitrator’s ruling of 6 June 2025 dealt only with a counterclaim brought by Namcor regarding alleged breach of contract. The substantive issue of dismissal has yet to be heard and is scheduled for hearing between 8 and 10 September 2025.Regarding the legal costs of N$6 million recently reported in Namibian Sun, Namcor explained that the figure covers a broad range of expenses since March 2023, including various investigations and legal due diligence for international transactions. The board argued that this cost must be viewed in light of the significant financial losses, missed commercial opportunities, and reputational harm caused to the company.“It is incumbent upon the board to take action against misconduct or suspected misconduct in the best interest of the company based on thorough investigations and legal guidance,” the statement said.Road to recoveryLooking ahead, Namcor affirmed its commitment to a turnaround strategy aimed at restoring operational and financial health. Measures are underway to improve internal controls, strengthen commercial operations, and align with best corporate governance standards.The company stressed its role as a strategic national entity and reaffirmed its commitment to rebuilding institutional resilience and restoring public confidence. Namcor said it will continue to work with stakeholders to support national energy goals and deliver long-term value for Namibia.“Through these efforts, Namcor is positioning itself for a more stable, accountable, and profitable future,” the statement concluded.

Namcor confesses its sins

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Namibian Sun 2025-07-07

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Namcor confesses its sins

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Namibian Sun 2025-07-07

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