Namcor-run National oil storage facility fails to break even
The facility is not yet operating at full capacity
Namcor declined to comment on the contract governing its management of the facility, saying it was not prudent to disclose its contents.
Namcor has revealed that hosting and pipeline usage fees at the National Oil Storage Facility (NOSF) in Walvis Bay, operated on behalf of the Ministry of Mines and Energy, are too low to achieve a break-even point, let alone profitability.
Since its commissioning in early 2021, the multi-billion-dollar NOSF has yet to turn a profit. Construction began in January 2015, comprising a tanker jetty, several product pipelines, and a terminal with a combined storage capacity of 75 million litres of petroleum products.
Commissioning started in December 2020 and concluded in February 2021, with an initial stock of 37 million litres of diesel, 21 million litres of unleaded petrol, and five million litres of very low sulphur fuel oil. Despite these modern capabilities, Namcor says sub-market-rate fees have kept the facility in the red.
Not prudent to disclose its contents
Namcor spokesperson Utaara Hoveka told Namibian Sun that Namcor and the Ministry of Mines and Energy have reviewed the NOSF fee structure for gazetting.
“This means future agreements will be based on these revised fees, which we anticipate will lead to improved financial performance of the facility,” he said.
Namcor declined to comment on the contract governing its management of the facility, saying it was not prudent to disclose its contents.
According to a mining and energy report, the facility is not yet operating at full capacity.
However, Namcor expects improved performance once the old jetty is decommissioned and all petroleum offloading shifts to the NOSF jetty, scheduled before the end of 2025.
Trading unit drives N$1.3 billion loss
The company’s challenges extend beyond NOSF. Namcor posted a net loss of N$1.3 billion for the 2022/23 financial year, largely driven by its Trading and Distribution subsidiary. The losses stemmed from high-volume transactions through Namcor Trading that failed to yield sufficient margins.
While revenue surged from N$610 million in 2017/18 to N$7.4 billion in 2022/23, cost of sales ballooned to N$7.5 billion, wiping out gains.
Governance failures, poor internal controls, stock losses, and unauthorised credit extensions were cited as key contributors.
From early 2022 to mid-2023, the Trading unit procured fuel volumes exceeding market demand, exposing Namcor to price volatility and pushing its debt to N$3.3 billion by March 2024. Of this, over N$1.1 billion was owed to a single creditor, creating a liquidation risk. The government stepped in with a N$1.2 billion guarantee in April 2024 to settle part of the debt, which now stands at N$1.6 billion.
Legal action to recover defaulted credit
Namcor is pursuing legal action to recover N$841 million from defaulting customers who were extended credit beyond approved limits. Investigations into fuel theft at NOSF uncovered poor stock management and tampering with metering systems.
An unauthorised asset purchase worth N$53.2 million was annulled, and recovery proceedings are underway. The company also highlighted the procurement of a non-functional Enterprise Resource Planning (ERP) system, which cost more than N$68 million, nearly triple the initial budget.
Namcor further noted that it is implementing a turnaround strategy, including senior-level appointments aimed at restoring governance and financial stability.
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Since its commissioning in early 2021, the multi-billion-dollar NOSF has yet to turn a profit. Construction began in January 2015, comprising a tanker jetty, several product pipelines, and a terminal with a combined storage capacity of 75 million litres of petroleum products.
Commissioning started in December 2020 and concluded in February 2021, with an initial stock of 37 million litres of diesel, 21 million litres of unleaded petrol, and five million litres of very low sulphur fuel oil. Despite these modern capabilities, Namcor says sub-market-rate fees have kept the facility in the red.
Not prudent to disclose its contents
Namcor spokesperson Utaara Hoveka told Namibian Sun that Namcor and the Ministry of Mines and Energy have reviewed the NOSF fee structure for gazetting.
“This means future agreements will be based on these revised fees, which we anticipate will lead to improved financial performance of the facility,” he said.
Namcor declined to comment on the contract governing its management of the facility, saying it was not prudent to disclose its contents.
According to a mining and energy report, the facility is not yet operating at full capacity.
However, Namcor expects improved performance once the old jetty is decommissioned and all petroleum offloading shifts to the NOSF jetty, scheduled before the end of 2025.
Trading unit drives N$1.3 billion loss
The company’s challenges extend beyond NOSF. Namcor posted a net loss of N$1.3 billion for the 2022/23 financial year, largely driven by its Trading and Distribution subsidiary. The losses stemmed from high-volume transactions through Namcor Trading that failed to yield sufficient margins.
While revenue surged from N$610 million in 2017/18 to N$7.4 billion in 2022/23, cost of sales ballooned to N$7.5 billion, wiping out gains.
Governance failures, poor internal controls, stock losses, and unauthorised credit extensions were cited as key contributors.
From early 2022 to mid-2023, the Trading unit procured fuel volumes exceeding market demand, exposing Namcor to price volatility and pushing its debt to N$3.3 billion by March 2024. Of this, over N$1.1 billion was owed to a single creditor, creating a liquidation risk. The government stepped in with a N$1.2 billion guarantee in April 2024 to settle part of the debt, which now stands at N$1.6 billion.
Legal action to recover defaulted credit
Namcor is pursuing legal action to recover N$841 million from defaulting customers who were extended credit beyond approved limits. Investigations into fuel theft at NOSF uncovered poor stock management and tampering with metering systems.
An unauthorised asset purchase worth N$53.2 million was annulled, and recovery proceedings are underway. The company also highlighted the procurement of a non-functional Enterprise Resource Planning (ERP) system, which cost more than N$68 million, nearly triple the initial budget.
Namcor further noted that it is implementing a turnaround strategy, including senior-level appointments aimed at restoring governance and financial stability.
[email protected]
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