Quota auction disaster

Government yesterday conceded failure of its inaugural fish quota auction, which generated a shocking return on one of the country’s leading resources.

01 October 2020 | Fishing

STAFF REPORTER

WINDHOEK

A series of schoolboy errors has led to a massive failure of the government’s recent fish quota auction, which netted the state a paltry N$8.4 million out of successful bids that were initially worth N$464.9 million.

The successful bidders from the first round of the auction were awarded bids valued at a collective amount of N$627.9 million, but some could not make it to the second round where further scrutiny occurred.

The auction, held in part to raise funds to fight the Covid-19 pandemic, was conducted on the advice of the Presidential High Level Panel on the Namibian Economy (HLPNE).

The Johannes !Gawaxab-led panel concluded that key national resources should be disposed of more to the benefit of the broader society than that of a few rich individuals, as has been the case for decades.

Out of the highest successful bidders, only five managed to take up their offers and settled their payment obligations, which amounted to N$8 446 000, finance minister Ipumbu Shiimi told journalists late yesterday.

What may be deemed as a comedy of errors by government officials has contributed to the spectacular failure of the process that has generated controversy from the very beginning.

One such error, some may argue, was that the allocated timelines for payment and for harvesting the quota were too short to enable international companies to participate in the auction.

Out of time

Ipumbu says the government did not have enough time to ensure that all necessary measures were put in place before the auction took place.

“This was mainly due to the fishing season for some species, such as hake, which is ending today, and we wished to have the quota exploited before the end of the season. It was therefore difficult to provide a longer payment period for bidders,” the minister said.

Another challenge, the minister pointed out, was that “most, if not all” bidders do not own vessels.

“It also appears as if many fishing industry existing players that own vessels stayed away from the auction while those that participated, their bid prices were far lower than the reserved price,” he said.

“New players that participated in the auction claimed that they faced a number of challenges such as non-availability of Namibian-registered fishing vessels, which was a condition of the auction. The position of the industry, through the Confederation of Namibian Fishing Associations, is that it is not in support of auctioning of the governmental objectives quota.”

Bidders complained about the limited time left for them to catch their allocated quotas and requested an extension of the fishing season, but there were legal impediments to this.

“In respect to the request from bidders to extend the fishing season, it should be noted that in terms of section 38(1) of the Marine Resources Act, Act 27 of 2000, the minister of fisheries and marine resources limits the total allowable catch (TAC) for a given period. After the fishing season period, there is a time period for spawning (reproduce). Therefore, the quota cannot be harvested outside the fishing season,” Shiimi clarified.

The minister said because of the disappointing turn of events, there remains unallocated quotas for different species. They are 10 900 tonnes of hake, 70 483 tonnes of horse mackerel and 92 tonnes of monk.

Way forward

Despite the hard lessons, Shiimi says fish quota auctions will be held in the future.

“The technical committee [tasked with this process] has been directed to plan future government objective fish quota auction(s) for the next season for hake and horse mackerel, starting in November 2020 and January 2021 respectively, taking into account lessons learnt from this auction.

“We have learned good lessons from this auction and that will be valuable going forward. In the future, punitive measures will be introduced, including requirements for payment guarantees or bid securities before participation in the auction.

“This will ensure that bidders meet their financial commitments and will mitigate the risk of speculative bids. In addition, more time will be given to bidders to arrange their finances.”

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