Friday 18 June 2021
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Shanghala’s oil storage revelations

…‘I am loyal to Geingob and I am not corrupt’

  • Officials not heeding legal opinions
  • Treasury lacks skills to engage in complex economic matters
  • Swapo members have betrayed party ethos
  • Oil storage blood bath for government

Former attorney general who currently serves as the justice minister, Sakeus Shanghala, said the political leadership that spearheaded the contract negotiations on the National Strategic Oil Storage Facility are to blame for escalated costs of the facility because they ignored legal opinions.
He also indicated that Treasury officials lack the skills required to engage in complex economic matters.
The oil storage facility cost ballooned from the initial N$3 billion to N$5.5 billion, this is due to the fact that government was exposed to currency fluctuations.
These revelations are contained in a letter, seen by The Patriot, in which Shanghala responded extensively when President Hage Geingob asked him to explain claims of corruption levelled against him in a letter dated 7 February 2018.
Geingob asked Shanghala to give his side of the story on six allegations related to tender price inflation, profligate state spending, colluding with contractors and giving poor legal advice on several government projects during his time as attorney general.
According to Geingob, Shanghala was also accused of colluding with project contractors and it is further alleged that his advice on the oil storage has cost government in excess of N$500 million to date.
Shanghala’s advice for government to settle at higher contract values contributed to exposing government to foreign exchange fluctuation risks.
Shanghala told Geingob that he is perplexed by the allegations because “when the contracts that are the problem with the National Oil Storage Project were concluded, I was the Chairperson of the Law Reform and Development Commission. How could I therefore have colluded with the Contractor?”
Shanghala said he diagnosed the problem with the contracts whilst attending a meeting of the Cabinet Committee on Treasury after hearing the Minister of Finance refer to the contract as being denominated in the Namibian currency.
“The Minister was of course wrong,” said Shanghala.
He said after Cabinet discussed the matter, he was tasked to probe any wrongdoing and draft charges as well as to renegotiate with the contractor.
“That report was done on 16 February 2017.
The Minister of Finance took issue with one of my recommendations and refused to consider my report.
Needless to say, everything I cautioned in that report has either been eventually adhered to, or it has occurred or it is occurring,” Shanghala revealed.
Shanghala stressed that the political leadership responsible for the project at the time failed to heed to professional advice on the matter of foreign currency exposure.
“This alone to led to the ballooning of the project from the territoty of N$3 billion to over N$5 billion.”
Shanghala told Geingob that his advice was not followed and another legal advisor was subsequently procured.
“How my advice has caused such damage to government, apparently quantified to amount to half a billion is not explained.
On my part, I explained how the initial failure to heed to technical advice left government exposed to currency fluctuation.
It was a blood bath for government.
I also explained how the inaction of the Minister of Finance caused losses.
I have not delved further into the omissions of the Cabinet Committee on Treasury and its debilitating effect upon decisions and works on the project, as no one was willing to take responsibility,” Shanghala said.
Government in the past said the finance ministry engaged the African Development Bank (AfDB) and the Development Bank of Namibia (DBN) to finance the national oil storage, oil pipeline and petroleum jetty project for N$4 billion.
US dollar currency exposure in the project emanating from the agreement signed between CRB-Joint Venture and the (finance) ministry was blamed for the price escalation.
The storage contract was awarded to CRB, a joint venture between China Harbour Construction Engineering and Babyface Civils owned by Vaino Nghipondoka.
Shanghala has in recent years faced potentially career-killing corruption allegations. Throughout it all, his position in party, Cabinet and his proximity to President Hage Geingob has carried him through.
The tide may be turning for Shanghala.
In the public discourse, he has been singled-out as one of the most corrupt cabinet ministers allegedly.
This is despite the fact that he was never convicted.
While Shanghala remains prominent in the party and government, he has become increasingly unpopular among Namibians, including rank and file members of his own party.

Namcor and the storage facility
Namibia’s current strategy in terms strategic fuel reserves states that the country should hold between 30 to 45 days of reserves. Currently it is estimated that all the fuel storage facilities in the country can cater for a mere 15 days or less of strategic fuel reserves.
Government cautioned that planning for such short periods holds no security for the country of any sort, specifically if the demand and supply situation is disrupted.
NAMCOR is actively seeking to secure access to strategic storage, which will be significantly boosted with the current construction of of a 75 million liter storage facility in Walvis Bay, which constitutes an investment of close to N$4 billion. The facility will be operated by NAMCOR.
The new bulk storage facility will be the largest fuel storage facility in the country, and the first ever to be 100 percent owned by government through NAMCOR.
Existing storage facilities are owned by private oil companies.
The new facility will allow the country to keep a given threshold of products.
With the construction of this facility, NAMCOR intends to establish depots in strategic towns such as Ondangwa, Grootfontein, Mariental, Keetmanshoop, Gobabis and Luderitz.

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