By Megameno Shikwambi
History has this week been made at Namcor as the state owned company opened its first filling station at the Hosea Kutako International Airport, officially entering the downstream sub sector.
The undertaking is a collaborative effort between Namcor and the Namibia Airports Company (NAC), a combination hailed by mines and energy minister, Tom Alweendo.
“Today is indeed a momentous day in the history of Namcor as we gather to inaugurate this Namcor service station here at Hosea Kutako International Airport. This is indeed a milestone for Namcor in our quest to diversify our sources of revenue and steer ourselves towards a sustainable state owned enterprise that creates value for its stakeholders,” said Namcor Managing Director, Immanuel Mulunga.
He said there has been a persistent debate about Namcor’s entrance into the retail sector, and that it should not compete with the private sector.
He said that it was sad that such sentiments were coming from “some of our politicians.
But I have to say that according to the Petroleum Production Act, which is the Act that establishes Namcor, this activity is indeed part of our mandate. We have a mandate to play a role in the upstream sector. We have mandate to play a role in the downstream sector.
That is one of the three reasons that we have decided to enter the retail space. The second reason why we have decided to enter the retail space is that although the downstream sector is highly regulated, we have to believe that there is more scope for better margins in the retail sector.
The commercial sector is highly competitive and you will be lucky if you get a 30cents per liter margin. But here in the retail sector margins are more than N$1 per liter. So it is much more competitive commercially if you obviously know what you are doing.
The third reason why we entered this sector is because of our own sustainability. What is the point of having a national oil company if you only have a market share of 3% or 5% in your own domestic market? It doesn’t make sense to me. And this is what has been happening for the last 28 years or so,” said Mulunga.
Mulunga said Namcor’s entrance to compete in the market has been a conscious decision with the aim to dominate the market, a trend that is global, he added.
He said Namcor should be able to penetrate the global space.
“We have achieved so much this year and I have to pay tribute to the Namcor staff members because what we have managed to achieve this calendar year alone, is something that we would probably have taken any company five years to achieve,” he said.
Alweendo said the development provides motorists a wider choice of where they can buy their fuel from.
“Equally I also believe it is going to benefit out business people because although Namcor built this site but I believe the site will be operated by Namibian entrepreneurs and therefore it is going to give us a choice, but it is also going to give us some opportunities.
Therefore I wish to congratulate Namcor on that achievement. I would also like to recognize the partnership between Namcor and the Namibian Airports Company. I think we need to do more of this kind of collaboration especially among the government owned companies. I don’t know who is going to make more money from this, is it NAC or is it Namcor? But again Namcor was able to negotiate a better deal with NAC to make sure that this is a win-win partnership,” he said.
He said Namcor’s retail agenda concurred with legislation.
He said the agenda was to establish a sufficient network of a retail fuel site envisaged to be profitable and be able to provide services in rural areas where some existing companies are not reaching.
“We expect a commercially classified SOE to venture into this kind of business operation in order for our companies to give the shareholder some value. Therefore we appreciate that this is what Namcor is doing. You will agree with me that it has been a challenge for most of our SOEs in terms of providing value to the shareholder,” said Alweendo.