The National Petroleum Corporation of Namibia (Namcor) is in fix after importing fuel worth N$600 million despite its service stations only able to consume eight percent of the order.
Namcor imported 20 million litres of ULP (unleaded petrol) of which 3.6 million litres still remain, 37 million litres of ADO (diesel) of which 17 million litres still remain, and nine million litres of lower sulphur fuel oil (LSFO) of which four million litres are still remaining.
The large volume of the import, brought in the country as part of the commissioning of the National Oil Storage Facility, has caused a significant portion of the fuel to be contaminated, a position confirmed to Windhoek Observer by Namcor Board Chairperson, Jennifer Comalie.
“Yes. We were expecting some of it to some extent. It’s the whole commissioning of the facility, so you have those kinds of risks. That order was handled by the whole commissioning committee. We had to commission the facility with fuel.”
Why the entity had approved such a big order, which the company is now struggling to offload, the Namcor chairperson said, “the whole order was discussed and approved by the commissioning committee, which is made up of the Ministry of Mines and Energy, the owners of the facility and Namcor board.”
“That was the product that was needed to commission the storage facility. Alternative arrangements were made to sell the product within the industry. That is what the commissioning committee determined is the amount of fuel required.”
About the value of the fuel that has been contaminated, Comalie referred the newspaper’s queries to Namcor management.
Namcor Managing Director, Immanuel Mulunga, when contacted by the Windhoek Observer, denied that some of the fuel had been contaminated despite a confirmation from the company board chairperson.
“When you commission a facility of this nature you have to flush the pipelines before you introduce product in the tanks to make sure it’s clean. Ordinarily this fuel would be dirty and is normally stored in a separate tank to be de-watered and filtered before being reintroduced into the rest of the tanks. I can categorically state that Namcor did not contaminate any product as the facility was being commissioned by the Contractor before it could be handed over to Namcor.”
Quizzed on why Namcor had taken the risk of placing such a big order when it did not have the fuel import mandate back and its retail outlets currently having limited capacity, Mulunga said, “The facility has a capacity of 75 million litres of Diesel, ULP, Jetfuel and HFO. We therefore had to bring in so much fuel to test the operation of the jetty, pipelines and all tanks before the facility is handed over to Namcor.”
“Government did not have the resources to purchase this commissioning/testing fuel and Namcor thus had to come up with an innovative scheme to assist them to commission their facility. This product would then be sold onwards to Namcor’s customer base over a few months. This has nothing to do whatsoever with the import mandate,” he said.
On how the company planned to recover the N$600 million invested in light of the resale delays of the commodity, Mulunga said, “We are making sales on a daily basis to an extent that by now a big proportion of the fuel that was imported in December has already been sold. We expect to sell off the bulk of this imported fuel by the end of March 2021, apart from the unpumpable volumes,” he said, adding that the value of the that that cannot be pumped is around N$18 million.
According to Mulunga, the procurement was self-funded by Namcor via its suppliers, although the newspaper could not verify the financial capacity of the company.
Public Enterprises Minister, Leon Jooste, said, “This is an operational issue,” and referred the Windhoek Observer back to the Namcor board.
Namcor has been lobbying to have its fuel import mandate back after the Namibia Competition Commission (NaCC) in 2019 refused Namcor’s application for exemption for a proposed 50 percent import mandate.