Enercon demands N$484m from defence ministry

Despite receiving N$60.9 million in February as part of a civil claim settlement against the ministry of defence, embattled fuel supplier Enercon is still demanding N$484 million in damages over the purported cancellation of its 15-year fuel supply agreement with the ministry.Enercon, through its lawyers, alleges that the ministry’s actions were unlawful, unjustified and in breach of contractual obligations.In a letter dated 16 April 2025 to defence ministry executive director Annely Haiphene, lawyer Sisa Namandje, on behalf of Enercon, said his firm had been instructed to reiterate that the cancellation of the fuel supply agreement, dated 15 September 2016 and set to last until 2031, was neither lawful nor properly effected. The contract stipulated that Enercon would supply petroleum products to the ministry of defence and construct fuel depots or service-station infrastructure on Namibia Defence Force (NDF) bases.The agreement reportedly included a controversial clause obligating government to settle outstanding invoices even after termination – a provision critics have dubbed a “devil’s clause” as it left the state liable for payments despite alleged non-performance. This clause was later referred to when the ministry paid Enercon large sums after the contract ended.Namandje, who is also representing Enercon founders and brothers Peter and Malakia Elindi in the ongoing Enercon-Namcor corruption saga, insisted that the cancellation was unlawful.He cited clause 15.1.4 of the agreement, as amended by a 10 February 2017 addendum, which allows Enercon to lodge claims for actual financial loss or general damages in the event of a material breach. According to Namandje, this clause entitles Enercon to claim consequential losses, including total investments made, projected losses for the remainder of the contract based on annual consumption of 12 million litres, and any monthly service bureau charges payable.'Precarious' situationNamandje argued that the ministry’s actions placed Enercon in a “precarious commercial position”, leading to defaults with third-party obligations and severely affecting the company’s liquidity and operational stability. He stressed that the grounds for the ministry’s decision were vague, unsubstantiated and without merit. He demanded payment of the full amount by 30 April 2025, warning that failure to comply could lead to urgent legal action, including a High Court interdict to restrain the ministry from using Enercon’s fuel infrastructure.While adopting a firm stance, Namandje indicated that Enercon remained open to genuine discussions for a mutually acceptable settlement, potentially through a structured payment plan. The N$484 million claim is made up of projected losses of N$151 million for supplying 12 million litres annually, N$120 million from Strategic Petroleum Reserve (SPR) supply of 2.4 million litres quarterly, N$49.3 million in infrastructure investments for the home base, and N$73.5 million in SPR bureau charges with 10% annual increases. It also includes charges for home base fuel stations, petroleum products such as Jet A1 estimated at 100 000 litres monthly at N$2.50, and lubricants estimated at N$2.4 million quarterly at a 15% margin.Settlement discussionsIn a 6 May 2025 reply, Haiphene acknowledged receipt of Enercon’s demand and confirmed that the matter had been referred to the attorney general for consideration. She requested sufficient time to analyse the matter thoroughly and indicated that the ministry would await the availability of its defence legal advisor in August before proposing a round-table engagement to deliberate on the way forward.Yesterday, defence spokesperson Colonel Petrus Shilumbu confirmed the N$60.9 million payment earlier this year, describing it as the final settlement of service bureau charges under the fuel supply agreement. He noted that the amount had never been claimed since the inception of the contract but that the two parties had negotiated a settlement for the outstanding amount, with Treasury expenditure authorisation obtained following the attorney general’s legal opinion.Shilumbu previously confirmed that the fuel supply contract with Enercon Namibia is no longer active, following the company’s financial collapse and provisional liquidation. The last fuel delivery from Enercon took place on 21 May 2024, months before its operations ceased. The NDF is now supplied by August 26 Holdings, a company owned by the defence ministry.August 26 receives zeroAlthough August 26 Holdings holds a 25% stake in Enercon, it says it received none of the N$60 million paid out in February. As a shareholder, it had expected a portion of the funds, but this did not materialise. Enercon also owes August 26 over N$12 million after taking a N$15.3 million loan to purchase fuel for the defence ministry when the company faced operational and logistical challenges following the death of former president Hage Geingob last year. To date, only N$2.9 million has been repaid.August 26’s acting CEO, David Brown, confirmed the debt to Namibian Sun on Monday, explaining that the N$15 million was spent to buy fuel on behalf of Enercon. When the N$60 million settlement was paid earlier this year, Brown said it was expected that August 26 would be repaid, but that never happened. “That’s from my internal investigations,” he added, noting there may have been meetings between the August 26 Holding chairperson and Enercon, although he could not confirm the outcome of those discussions.

Enercon demands N$484m from defence ministry

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Namibian Sun 2025-08-13

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Enercon demands N$484m from defence ministry

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Namibian Sun 2025-08-13

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