Namcor Stuck with N$200-mil Fuel

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By Kuvee Kangueehi

Windhoek

The National Petroleum Corporation of Namibia subsidiary – Namcor Trading – is in a serious crisis. Namcor faces possible loss of millions of dollars if it does not reach an agreement with oil companies in Namibia soon.

Four fuel companies – BP, Engen, Caltex and Shell Namibia – have refused to buy fuel from Afroneft, an import agent for Namcor, after the company allegedly failed to supply the fuel in accordance with local fuel specifications.

The four companies are not happy with the vessel that was used to transport the fuel, as it is not approved to transport fuel.

The situation has created a crisis at Namcor and an urgent board meeting was called over the weekend. Minister of Mines and Energy, Erkki Nghimtina, was also informed about the situation.

It is believed that the fuel products, which are unleaded petrol, leaded petrol, diesel, paraffin and avgas, are valued at more than N$200 million. Namcor will suffer losses unless it finds a buyer of this fuel.

Prime Minister Nahas Angula told New Era that he was approached by
Nghimtina who informed him about the stalemate between Namcor and the fuel companies.

Angula said he told the Minister of Mines and Energy that the issue should not be politicised and that Namcor and the fuel companies should find an amicable solution.

Angula said he was informed by the minister that the fuel companies, particularly BP and Engen, are refusing to offload the fuel, claiming the vessel which transported the fuel does not meet the specifications they had agreed on earlier.

The Premier added that it also appears the fuel companies gave Namcor a list of vessels they could choose from to transport the fuel but Namcor ignored the advice maybe because of financial implications.

New Player

The Premier said the fuel companies should also understand that Namcor is a new player in the oil business and thus the fuel companies must be ready to share the cost of any loss that might occur.

This is the first consignment of fuel that Afroneft, which was awarded the tender by Namcor to import 50 percent of its petroleum products, was expected to deliver.

The Switzerland registered company, Afroneft, was awarded the tender last year for the period of January 1 to December 31 this year after the contract of the previous suppliers Namibia Liquid Fuel (NLF) Ltd expired last year.

The consignment arrived on Friday at Walvis Bay and the fuel companies were advised to offload the fuel on the same day.

Following the refusal by the fuel companies to offload the fuel, the vessel was instructed by NamPort to move from the dock as other vessels wanted to use the port.

By yesterday morning, the vessel carrying the fuel had moved to international waters waiting for Namcor and the fuel companies to reach an agreement before offloading can start.

Following the stalemate between Namcor and the fuel companies, some people in the oil industry want to know why Namcor did not award the tender to NLF which fulfilled its contractual obligation with Namcor.

NLF, which had a joint venture with Sasol Oil Ltd, was awarded the tender by Namcor from 2004 to 2007 and was the import agent of the 50 percent that Namcor is expected to import according to the Petroleum Act.

However, NLF did not bid for the new tender last year because the tender demanded that the company that wins the tender must have an international supplier. NLF discovered that this would not be viable and did not tender. NLF was given a three-month notice by Namcor that their tender was coming to an end in December 2007.

While NLF guaranteed Namcor the security of supply and the guarantee of the quality of the product, the current suppliers Afroneft does not seem to offer the same security to Namcor. Namcor stands the risk of paying for the fuel if it does not get a buyer.

Last year, eight invitations to tender for fuel supply were sent out and seven bids were received, with three companies short-listed. Afroneft eventually won the tender.

Namcor says they only invited tenders from selected reputable fuel suppliers with a proven track record, and with access to a variety of product sources, taking into account their ability to supply in accordance with local fuel specifications, as well as their financial strength and credibility.

Afroneft is backed by Glencore UK Limited, an international trading company with more than 30 years in the petroleum trading industry.

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