Namcor fuel 'monopoly' thwarted

15 November 2019 | Energy

The National Petroleum Corporation of Namibia's plan to import up to 50% of Namibia's fuel has been rejected by the Namibia Competition Commission (NaCC), Namibian Sun established this week.

The Commission rejected the bid, fearing it could negatively affect existing fuel suppliers and create a price-maker in the guise of Namcor.

Namcor spokesperson Utaara Hoveka says this has forced the corporation to reconsider its strategic priorities.

“The Competition Commission has declined our application to import 50% of the country's fuel requirements on the grounds of anti-competitive behaviour.

“We have as a result abandoned the quest for the 50% import mandate. It is no longer part of our strategic priorities,” he said.

It was reported earlier this year that by applying to the NaCC for exemption, Namcor would have been allowed to enter into agreements that would directly or indirectly fix selling and purchasing prices; divide markets by allocating customers, suppliers and specific type of goods; and limit and control production, as well as any other agreement that would give them a competitive advantage over private companies.

Since 2015 Namcor has made repeated attempts to have its fuel import mandate restored. The state oil and gas company was stripped of the mandate by former mines minister Isak Katali because it was technically insolvent.

Namcor in 2008 signed a 50-50 fuel supply deal with Glencore and its subsidiary, Petroneft International. The agreement was cancelled in 2010, after the government said it was not favourable to Namibia at the time.

Within the first nine months of starting to trade with Glencore, Namcor suffered losses of around N$195 million, plunging it into technical bankruptcy, according to a PriceWaterhouseCoopers (PwC) audit completed in October 2009.

Glencore successfully challenged the suspension of the contract in the Namibian High Court in 2011.

The court overturned the cabinet decision and argued the parties should have had the right to be heard by the cabinet before a decision was taken.

The court ruled the decision was in conflict with the constitutional right to fair procedure. The government eventually paid Glencore N$538 million when it terminated the supply contract. Private fuel companies thereafter were tasked to import fuel.

OGONE TLHAGE

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