Alweendo sticks to his guns on fuel storage

08 August 2018 | Energy

OGONE TLHAGE

Energy minister Tom Alweendo feels that if any entity should manage the strategic fuel storage facility in the port of Walvis Bay, it should be the oil and gas parastatal, the National Petroleum Corporation of Namibia.

The N$5.6 billion facility, which is still under construction, is expected to be handed over to the government next year January and should expand current storage capacity from 14 days’ supply to 30 days’.

The facility is 95% complete, according to the minister.

“Given that Namcor is our national oil company, it makes perfect sense that Namcor will be the operator of the facility on behalf of the government.

“The operator will need high-level technical skills to operate the facility and Namcor will need some time to build the requisite skills,” Alweendo told Namibian Sun.

“The project is now 95% completed and if all goes well handover will be in January 2019. Given the complex nature of the project it is not unusual to experience some delays.”

According to him, Namcor would be able to run the facility by recruiting skilled personnel or acquiring a technical partner to assist with the building of technical skills.

Swiss company Vitol had in the past made an unsolicited bid to the government to operate the fuel storage facility.

Vitol is alleged to have offered US$1 per year to rent the facility for ten years. In addition, Vitol also offered to pay the government N$160 million as part of the transaction.

The Namibian newspaper in February reported that Vitol SA had proposed to operate the storage facility for a maximum of ten years, but it was open to a 15-to-20-year deal.

According to the report, the Vitol offer was made in November 2017.

Vitol submitted the proposal to finance minister Calle Schlettwein, who forwarded it to the cabinet for consideration, The Namibian reported.

Vitol would offer only 30 cubic metres (or 30 000 litres) of the total 70 000 cubic metres petroleum storage space to the government for emergency uses.

The rest of the storage space, 69 997 cubic metres, would be used by Vitol. This meant that Vitol would use 99.9% of the facility, which was built to store Namibia's strategic petroleum reserves.

Vitol also promised to supply 19 000 cubic metres of diesel and 12 700 cubic metres of unleaded petrol to Namibian fuel stations, a proposal described by a source as a move that would hand the Swiss company 45% of the Namibian fuel market.

The fuel storage facility will be the largest in the country, and the first to be 100% owned by the government.

Alweendo also briefly touched on a request by Namcor to have 50% of its fuel import mandate restored.

The mandate was revoked in 2010 after Namcor became technically insolvent. The idea to restore the mandate was pushed by then chairperson of Namcor, Johannes !Gawaxab.

Should Namcor succeed in its bid to have the mandate restored, it would be responsible for importing up to 50% of Namibia’s fuel needs.

Alweendo said his ministry had not yet received a formal request from Namcor.

“Namcor has not as yet formally requested the restoration of its import mandate. When they do so the government will look at the measures that Namcor has put in place to avoid the pitfalls experienced the last time when they had the mandate,” he said.

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