Windhoek-Construction of the N$5.6 billion national oil storage facility at Walvis Bay will be completed in June this year, Deputy Minister of Mines and Energy Kornelia Shilunga confirmed on Tuesday.
Shilunga said the project, which is funded through the National Energy Fund (NEF), is nearing completion at an overall rate of 95 percent with the projected total cost of N$5.6 billion, which has escalated from an initial estimate of N$3.7 billion a few years ago.
Upon completion, Shilunga said, the facility is expected to improve the country’s security of fuel supply, create employment opportunities and also contribute to government revenue.
She said in addition, the NEF continues to subsidise energy prices as per its mandate, through levies imposed on controlled petroleum and electricity.
Shilunga said that during the 2017/18 financial year NEF paid N$22 million to the suppliers of petroleum products to subsidise the prices of petrol and diesel.
Similarly, she said, during the same financial year, NEF paid an amount of N$104 million for fuel road delivery subsidy to rural/far outlying areas of the country.
“These communities are generally less affluent and they cannot afford the full cost of delivering fuel to their locations to be added to the pumps prices,” she said during the motivation of the ministry’s N$264 million budget in the National Assembly.
The new bulk storage facility will be the largest fuel storage facility in the country, and the first 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 new storage facility, National Petroleum Corporation of Namibia (Namcor) aims to establish depots in strategic towns such as Ondangwa, Grootfontein, Mariental, Keetmanshoop, Gobabis and Lüderitz.
Namcor currently runs three fuel storage depots across the country and holds a nine percent stake in the wholesale distribution of fuel but is also looking at establishing a number of fuel stations countrywide.
Fuel imports are said to be the major drain on Namibia’s foreign currency reserves. For a country such as Namibia, which is a net importer of fuel (and a ‘price-taking country’, as opposed to a price-setting country), building the internal bulk storage facility with capacity to store at least 30 days’ worth of reserve fuel is considered a good practice by international standards. Highly industrialised countries such as China and the USA tend to store at least six months’ worth of fuel.