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MORATORIUM WELCOMED: The Fuel and Franchise Association of Namibia (FAFA) says it is happy that a moratorium on downstream fuel licences was introduced.
MORATORIUM WELCOMED: The Fuel and Franchise Association of Namibia (FAFA) says it is happy that a moratorium on downstream fuel licences was introduced.

Timing of fuel station moratorium questioned

No new petroleum licences to be issued
Fafa chairperson Hennie Kruger said the decision would help save fuel stations from demise in the future, but he questioned whether its timing would help matters much in the short-term.
OGONE TLHAGE
The Fuel and Franchise Association (Fafa) of Namibia says a decision taken to implement a moratorium on the issuing of downstream petroleum licences may be a little too late to protect the viability of fuel stations across Namibia.

The ministry of mines said it would not accept applications for new fuel retail sites and wholesale licences nationwide until further notice.

Reacting to the development, Fafa chairperson Hennie Kruger said the decision would help save fuel stations from demise in the future, but he questioned whether its timing would help matters much in the short-term.

No short-term solution

According to Kruger, the association had repeatedly written to the ministry of mines, asking it not issue new downstream petroleum licences as the volumes in Namibia were too low for fuel stations to operate at an optimum level.

"In the long-term, it is a good thing. The question is, however, is it not too little, too late? We’ve constantly been writing to the ministry that volumes were under pressure, but it is definitely a step in the right direction," Kruger said.

"How long it will take operators to recover in the short-term is not known, not at all. This is something that we will have to deal with. It is a tragedy, but this measure is a good step," he added.

Number of operative licences a concern

In motivating its reasons for issuing the moratorium, the ministry said it was looking at the situation of fuel service stations with great concern.

"The ministry has noted with great concern that both the fuel wholesale and retail markets are highly saturated with licences. This situation has created problems that ultimately lead to high fuel prices in the country," it said in a statement.

Kruger also previously bemoaned the number of licences that had been granted to the state-owned oil company, the National Petroleum Corporation of Namibia (Namcor). He said this during an interview on Namibia Media Holdings’ broadcast programme ‘Kletskomopas’.

Expansion

He said after the ministry lifted a moratorium on new licences for fuel trading in March last year, 21 or 22 new licences were granted.

The majority were issued to Namcor.

Namcor is expanding its retail operations, adding more filling stations to the 12 that already exist, to have 33 filling stations nationwide by 2024.

"So many licences for new filling stations do not make sense in a market with declining volumes," Kruger said.

"They are creating a [volume] shortage," he said, adding that fuel station owners "are currently struggling. The fault lies with the regulator."

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Namibian Sun 2022-12-04

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