… A tale of mass resignations, arrests, heavy losses and begging bowls
STAFF WRITER
NATIONAL Petroleum Corporation (Namcor), overshadowed by one scandal after the other in the past 15 years, has set its sights on turning around its fortunes from a perennial loss-making entity to profitability.
The company sent its former Managing Director, Imms Mulunga, packing following various accusations, including making payments without board approval in 2023. One key payment that brought Mulunga to his troubles was the payment of N$100 million for an oil block in Angola.
He also stands accused of facilitating a N$60 -million payment to a company called Enercon for fuel that was allegedly never delivered. He is going through the court process for this.
The board chairperson, Jennifer Comalie, confirmed in April 2023 that indeed Mulunga was shown the door.
“I confirm that the MD has been suspended and that more details will be provided tomorrow in a press statement,” she told The Namibian then.
As if that was not enough, early this year, Namcor experienced a mass exodus of top managers in a feat that would make the great exodus of the Jews from Egypt child’s play.
The company said there was nothing amiss about the resignations.
“We want to note their resignations were not a direct result of any investigation, malpractices or business transactions, nor were they forced to leave the company. Damoline Muruko, Ilda Dos Santos, Isabel Mwazi, Mapenzie Festus and Khonzani Tizora made a personal and professional decision to explore new opportunities after serving Nmcor selflessly and diligently for several years. We respect their decision and appreciate their valuable contributions to the company and the petroleum industry as a whole,” the company said in a statement then.
Namcor added that the individuals who resigned have varying notice periods based on the position they held and resigned at different times during the year.
Fast forward, the Anti-Corruption Commission has arrested some of the managers in connection with several charges, including clearing unauthorised payments.
Some of those now in the dock include Mulunga, former Commercial Manager, Olivia Dunaitsky, and former executive Jeniffer Hamukwaya.
FULL INTEGRATION
Namcor Manager for Marketing, Communications and Public Relations Paulo Coelo told Namibia Business Review that the company has made decisions that allow it to be an integrated player in the downstream and upstream operations.
This is despite critics in the industry saying the company has no role in selling fuel at the retail level, as it risks stifling competition.
”Namcor’s strategic participation across both the upstream and downstream sectors was aimed at building a fully integrated national oil company. While downstream operations brought us closer to the consumer and increased brand visibility, the transition came with significant capital outlays and operational challenges. As with any long-term strategic shift, profitability is a work in progress,” Coelo said.
He said Namcor’s entry into the retail space was never to stifle competition but rather to stabilise supply, foster equitable pricing and ensure national energy security.
“As a state-owned entity, our role included filling market gaps where private players were less inclined to invest, especially in underserved areas,” he said.
A HOUSE ON FIRE
Recently, the company released a tell-all affair to the media detailing several challenges, among the heavy losses incurred since 2023, a move the now-troubled Mulunga believes was meant to target him.
In its detailed statement, Namcor said that although revenue had significantly increased in the eight years of Mulunga’s tenure, the company overcommitted on deals it could not sustain and continued to struggle to make a profit.
Failure to make a profit is a deja vu moment for the company, which was plunged into life support 15 years ago after entering a challenging fuel supply deal with Glencore.
“Namcor’s revenue increased significantly from N$610 million in 2017/18 to N$7.4 billion in 2022/23. However, this growth was accompanied by a steep rise in the cost of sales, which escalated from N$559 million to N$7.5 billion over the same period and the cost of sales, which escalated from N$559 million to N$7.5 billion over the same period,” Namcor said in a statement.
According to the company, the substantial increase in revenue did not help Namcor achieve profitability. They said the company recorded its worst losses in 2023, posting a net loss of N$1.3 billion.
“It is crucial to note that these losses were predominantly driven by Namcor Trading, which engaged in high-volume transactions that failed to generate sufficient margins.
“It is also important to highlight that Namcor Trading held one of the lowest market shares in the industry, estimated between 7% and 8% during the same period. This limited market positioning constrained its pricing power and competitiveness, further contributing to the sustained losses,” the company said.
SCAPEGOATING
A few days before his arrest, Mulunga told Namibia Business Review that he cannot be blamed for the sorry state of the parastatal alone.
He added that his regime saw an improvement in revenue inflows at the company.
“These allegations cannot go unchallenged. I left Namcor in April 2023 already, and the company got a bailout last year, but it is still making losses. How can you still blame that on me? It seems like it’s easier to continue putting the blame on Mulunga forever. Plus, the company made profits for the majority of the years that I was in charge, although there were losses also. The losses that were made were not necessarily due to mismanagement but due to unfavourable market conditions and the unwillingness of the shareholder to assist the company like other mother companies did to their Namibian affiliates,” he said.
GOVERNMENT BLAMED FOR FAILURES
A state source with close proximity to Namcor’s operations told Namibia Business Review that the Government has contributed to the continued financial failures at Namcor for more than two decades through the strict regulation of fuel prices.
The source told Namibia Business Review yesterday that, “The sales and marketing of petroleum products is a very difficult and complex undertaking, especially in Namibia where the government regulates the prices.”
According to the source, Namcor has been asking the government to adjust the basic fuel price formula even before Mulunga joined the entity, to no avail.
“The losses from the Glencore deal in 2011 were because of the same issue. Even the private players are struggling, but at least they have parent companies to bail them out. This information does not come out in the media,” the source said.
The source also questioned the ability of the current Board of Namcor to deal with the complex issues of poor performance at Namcor without an in-depth understanding of the industry.
MENDING PERIOD
Coelo told Namibia Business Review that 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,” he said.
According to Coelo, Namcor is also keen to play a meaningful role in the oil and gas industry with an increased stake.
However, he said the idea of increasing stake in their different blocs or new ones needs to be treated with caution, as they could push away potential investors.
His views come at a time when President Netumbo Nandi-Ndeitwah has moved the oil and gas downstream division under her watch.
Nandi-Ndeitwah appointed former Mines Ministry Deputy Minister Kornelia Shilunga as the advisor on that portfolio.
“Namcor holds free carry interests in exploration licenses per the provisions of Namibia’s petroleum legislation. 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,” Coelo said.
Coelo said Namcor supports the idea of setting up a refinery in Namibia.
“A refinery in Namibia would require a thorough feasibility study considering the volumes of available crude, market demand, and regional integration. While refining can bring value addition and employment opportunities, it is capital-intensive and operates on thin margins. Any move in that direction must be carefully assessed to ensure economic viability and long-term sustainability, particularly in a changing global energy landscape,” he said.
He says the country still has to navigate a few more years before reaping the fruits of the recent oil discoveries that have attracted multinational interest.
“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.
According to Coelo, Namcor needs more than just capital injection from the shareholder to find its footing again.
“While it’s difficult to pin a single figure to complete independence, Namcor’s path to sustainability lies in structural realignment rather than just capital injection. By focusing on upstream assets and strategic trading, we are repositioning ourselves to generate consistent revenue streams.
“Our aim is to transition to a self-sufficient commercial entity that can deliver shareholder value while supporting Namibia’s broader energy ambitions,” he said.
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