….As oil storage row heats up
Two cabinet ministers are heading for a bruising showdown over the multibillion dollar oil storage facility, with rife claims making the rounds that the Ministry of Finance is flexing its muscles to control the project instead of the Ministry of Mines and Energy which is the designated line ministry.
A National Oil Storage Operations and Strategic Implementation Steering Committee was constituted by former mines minister Obeth Kandjoze upon advice of Attorney-General Sakeus Shanghala in November 2017.
In addition, a Secretariat was established to administer and assist the administration of the Steering Committee.
The Steering Committee was established under Section 2 of the Petroleum Products Act, which makes the Minister of Mines and Energy responsible for all Petroleum-related matters in the country and grants the Minister wide-ranging powers to ensure that all Petroleum-related matters are properly regulated.
The Ministry of Mines and Energy also has a specialized Directorate of Petroleum Affairs to deal with the Petroleum related matters and it is this very Directorate, together with the National Energy Fund, which form the core of the Secretariat, who assist in the administration of the Steering Committee. The Committee set about doing its work and has made recommendations to the mines minister Tom Alweendo who in turn has taken his own recommendations to the Cabinet Committee on Treasury for endorsement.
The recommendations by Alweendo are, according to sources, correct and without incident being that Namcor and Namport will be operators of the Facilities and that all procurement be executed in terms of the Public Procurement Act, 2015.
Instead of endorsement, the Chairperson of the Cabinet Committee on Treasury (CCT) directed that the entire Project would fall under the auspices of the Cabinet Committee on Treasury apparently on the strength of a decision taken by the Cabinet Committee on Overall Policy and Projects (CCOPP), tabled by Finance minister Calle Schlettwein at the CCOPP without input from the Mines Minister, who does not serve on the CCOPP.
Accordingly, Schlettwein directed that the Steering Committee, appointed by the Minister of Mines & Energy, should report directly to him and refused to entertain anything related to the urgent needs of the Project in ensuring that Namcor and Namport are able to operate the Facilities.
Incensed, Alweendo explained to Schlettwein that the line Ministry staff cannot report to another Minister and accordingly, the Steering Committee would have to be chaired by the Finance Ministry, reconstituted by the Chairperson of the Cabinet Committee on Treasury. Sources told The Patriot that Alweendo cautioned that the Ministry of Finance will have to accept all responsibility for the delay and additional costs in decision-making due to the Schlettwein’s refusal to address the merits of the project and its further development.
The stand-off between the two Ministers has left the project in limbo.
There are now deep concerns that the Schlettwein is overstepping his boundaries by seeking to remove the project from the line ministry.
“There is no precedent for a Finance Minister to directly manage a petroleum storage project in Namibia. The state of events appears to put Government institutions in a legal quagmire, in respect of which the current Attorney-General has yet to decisively pronounce himself,” said the source.
Schlettwein has in the past been accused of using the CCOPP to push through the sale of MTC shares in defiance of the position of the independent regulatory authority (CRAN), on a decision tabled by Schlettwein on the strength of his position at the Cabinet Committee on Treasury.
The source said Schlettwein’s pursuance for the oil storage facility has raised eyebrows in many quarters because it endangers the rule of law and the separation of state powers.
“Schlettwein may seek to implement the same tactics to override the concerns of the line Ministry and other state institutions, including the Ministry of Defence, who hold a vested interest in the strategic nature and objectives of the Project, as well as oust the Central Procurement Board from the process,” said the source.
The Patriot also understands that the accounting officers at the finance ministry, Ericah Shafudah of Finance refused to chair the Steering Committee, in defiance of Schlettwein’s instructions to do so.
Shafudah last year received a final warning related to her previous involvement in the project.
Schlettwein has allegedly directed that the Deputy PS of Finance must chair the Steering Committee and report to him directly.
Sources at the Public Service Commission have informed this publication that the Minister of Finance has recommended Ally Angula for the position of Deputy Permanent Secretary at the Ministry of Finance, which if approved, could see Angula chairing the Steering Committee.
Public Service Commissioner Dr. Markus Kampungu yesterday said he is not aware of such a recommendation.
“If that is the case then it is yet to arrive to my office, until then I cannot comment on that,” he said.
Schlettwein appears determined to wrestle control of the project from Alweendo.
Sources close to Schlettwein are adamant that he has reservations over the Mines Ministry’s and Namcor’s ability to operate the Facilities and is therefore pushing for a Public-Private Partnership to be implemented, which is likely to involve the Vitol Group. Earlier this year Vitol offered Government 30’000 cubic metres of “free” fuel once off (less than half the tank capacity, with a value of approximately N$300 million) and a nominal US$1 per year to lease the Facilities and take complete control of the Facilities, built at a cost of a N$5.6 billion to the State.
In addition, pricing mechanisms appear to have been agreed and Namcor was left out completely during the process.
It is also not know if an impact assessment on the oil consumer has been done.
Similarly sized and equally critical projects such as the Neckartal Dam (slated to cost over N$6 billion) and the Namport Container Terminal (slated to cost over N$4.5billion) appear not to have generated the same type of interest in their operations.
With the Oil Storage Facility expected to import all of Namibia’s fuel needs (approximately 2 billion litres per year and rising) the monetary stakes with respect to this Project could not be higher.
At a nominal profit margin (or “commission”) of 50 cents per litre, an annual net amount of N$1billion will be generated for “distribution”.