Namibia torn between increasing state ownership in oil resource and attracting investment
STAFF WRITER
NAMIBIA which has attracted interest of various multinationals in the oil and gas industries is now torn between increasing state control in the industry and fend off unemployment, inequality and poverty on one hand and attracting investment and avoiding a resource case on the other.
Some of the major companies that have joined Namibia’s oil rush include Exxonmobil, Galp Energy ,TotalEnergies , Shell as well as Recon Africa Among many.
National Petroleum Corporation of Namibia (NAMCOR) says there is a need to strike a delicate balance between increasing state ownership or control of the oil find in the country and remaining a relevant and attractive investment destination.
Their views come at a time when Namibian President Netumbo Nandi-Ndaitwah created an upstream division under her office to create strict monitoring of Namibia’s newly found fortune in the oil industry .
Nandi-Ndaitwah made the decision after being inaugurated in March to curb potential corruption and make sure that the resource benefits local folk, and the government is well involved and has reasonable control of the resource.
“I have created a division on the oil and gas industry under my ministry. This is because this is a new industry and we are still learning about it.The office will make sure Namibia benefits from the resource,” Nandi- Ndaitwah said while announcing her cabinet earlier in the year.
Meanwhile NAMCOR, which holds free carry interests in exploration licenses per the provisions of Namibia’s petroleum legislation, told Namibia Business Review that there is a need for a fine balance between state ownership of the oil resources on Namibia’s shores and attracting foreign investment which is vital in extracting the oil.
“ While increasing state ownership is always part of broader national policy discussions, it must be balanced against the financial risks and capital requirements associated with exploration and production.
Our current model allows Namibia to benefit from its natural resources while remaining an attractive foreign investment destination. Commercial viability, strategic benefit, and national development objectives will inform any future adjustments to ownership structures,” Paulo Caelho ,NAMCOR spokesperson told Namibia Business Review in an interview.
While Namcor is conservative with the nature of and amount of state control and involvement in the Industry Nandi-Ndaitwah asks her Botswana counterpart Dana Boko recently announced decisions to pull resources to build an oil refinery.
Recently, Total Energies Chief Executive Officer Patrick Pouyanne advised the Namibian President to hold back the idea of a refinery.
He said the country is too small to effectively manage one and accrue profitability from the venture.
Namcor is undergoing a period of financial restructuring to stabilise operations and ensure long-term sustainability.
While government support has been essential during critical junctures, we are implementing stringent cost-control measures, enhancing governance, and optimising our investment portfolio. The decision to focus on upstream interests and international trading opportunities is expected to place the company on a stronger financial footing going forward,” Caelho added
The company also added that their transition to be a player in both upstream and downstream operations have been a game changer in making sure they are sustainable and do not rely on tax payer’s dollar for survival.
“ The transition from exploration to production typically spans several years and depends on multiple factors, including appraisal results, infrastructure development, and regulatory approvals. Namibia has made world-class discoveries, and several license holders have now moved into the appraisal and pre-development phases.
“We anticipate that first oil production could commence towards the end of this decade, with 2029–2030 being a realistic window, depending on technical feasibility and investment commitments,” he said.
ONLY WAY TO GO
Recently Social Justice Activist Rinaani Musutua told Namibia Business Review that Swapo’s push for increased control of national resources is a move in the right direction.
“I share the same sentiment as that of the Swapo Party Secretary General, Sophia Shaningwa, that Namibia should push for a larger stake in natural resource ownership. This will assist us to optimise more earnings from our natural resources,” she said.
She highlighted that Namibia’s mobilisation of financial resources from the mining sector at the current level is insufficient.
“Royalties paid by mining companies in Namibia (3%) are way too low compared to other mining countries (South Africa, Canada, and Australia). Export levies charged by Namibia are also way too low, at less than 2% on average for the 18 different mineral commodities it exports. Mining licence fees are low compared to, for example, Angola,” she said.
She argued that Namibia needs to implement policies that compel foreign corporations to provide an increased share to the local economy.
Her sentiments are also supported by Political Analyst Ndumba Kamwanyah told Namibia Business Review he agrees that pushing for a larger state stake can help reduce inequality.
“I endorse it, but if the policy lacks clarity or appears hostile to business, it may drive investors away. Namibia needs investment, and too much state control without capacity can hurt both growth and development,” Kamwanyah said.
He highlighted a clear link between poor control of national resources and alarmingly high levels of poverty, and said despite Namibia’s rich resources, many still live below the poverty line and lack access to basic services.
“State control is important, but only if the state is efficient and transparent. Without strong systems, processes and institutions of control, it can lead to mismanagement, corruption, and lost opportunities.
READ FULL INTERVIEW ON NAMCOR’S ROLE IN NAMIBIA’S OIL BOOM IN THE FORTHCOMING INAUGURAL NAMIBIA BUSINESS REVIEW MAGAZINE AND SUPPORT GOOD BUSINESS JOURNALISM BY ADVERTISING IN THE EDITION.
COMMENTS