Friday 23 April 2021
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Namcor yearns for life without levies

screen-shot-2016-10-07-at-12-11-47-pmNewly-appointed Namcor board chairman Patrick Kauta says the state oil company’s new board wants to eradicate the company’s overreliance on state levies and data sales, at the same time expressing that life without levies is possible for the company.
Kauta’s predecessor Johannes !Gawaxab said last month that the National Petroleum Corporation of Namibia (Namcor) is willing to forfeit the levy on the basic fuel price (BFP) in exchange for getting back its mandate to import most of the country’s fuel.
Kauta, together with Barbara Omoregie, Anna Libana(deputy chair), Lorentha Harases and Dr. Roger Swart were appointed to serve on the Namcor board this week.
“We have studied the financials and we have taken note of the challenges. In order to be successful and alleviate the overreliance on levies we see kudu[gas project], the 50% oil import mandate, bulk oil storage being currently under construction and the retail thereof as primary importance,” outlined Kauta adding that if those aspects are met, then the company will be able to operate optimally without having to rely on levies.
He further said the current low prices in the service sector creates a good opportunity to negotiate the project on the upstream side.
“We feel the current low prices of fuel creates an opportunity to negotiate in our favor and only once the aspects are fulfilled and we are on a solid footing can we speak about Namcor giving back the levies and end the over reliance on data sales,” he said.
He also noted that the morale of Namcor’s employees will be key to achieve the objectives of the company.
Mines and energy minister Obeth Kandjoze said the oil import mandate belongs to Namcor and that Government does not intend to be a barrier as far as returning the mandate to Namcor is concerned.
“The mandate should be returned to Namcor but we must ensure that risks are taken care of. We[government] reserve the right to set conditions to ensure that the company is not reduced to technical bankruptcy,” said Kandjoze. Kandjoze also called for ‘genuine cooperation’ between the board and the management of the company. “Governance is key and so is the protection of jobs.
I heard of intimidation taking place in the company and favoritism, I hope it is not true and that it is just rumours. But we all know there cant be smoke if there was no fire. These things must be redressed,” he said.
The background
Government stopped the State-owned company from importing fuel in 2011 during the tenure of then- Minister of Mines and Energy Isak Katali because the parastatal failed to sustain its operations.
The decision to halt Namcor’s fuel important mandate cost government at least N$500 million in bailouts.
Namcor had a 50/50 import agreement with British- based company Glencore, but the deal was terminated because it left the company insolvent, without any other potential revenue sources.
Namcor was left with liabilities of US$25 million, trading losses of N$257 million and a technical insolvency amounting to N$216 million after their engagement with Glencore hit a brickwall, local media reported at the time.
Namcor entered into an importation agreement with Glencore in 2008, but the State-owned enterprise failed to capitalise on the engagement, and also could not find profitability in the engagement.
In 2014 the company roped in a consultant to develop business plans and strategies which covered the full supply value chain from importation, storage, distribution and marketing of the various products.
The company wanted a viable strategic business plan, reviewing of the logistical, financial and operational risks and present solutions that will protect Namcor from such risks with the target being to completely de-risk the company from associated operational and trading risks.
Namcor since submitted the business plan to cabinet and a decision is awaited.

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