Namcor wants fuel mandate back
The state-owned energy company, Namcor is lobbying government for the return of its fuel import mandate that was withdrawn in 2010 after the company became technically insolvent.
Obeth Kandjoze, the newly-appointed Managing Director of Namcor told The Economist in an exclusive interview that a plan is currently underway to have the 50% fuel import mandate reinstated.
Kandjoze said: “The 50% mandate is something that we are seriously, and without doubt, carefully applying ourselves to in terms of the plans that we should be laying to Government. This [the return of the mandate] is without doubt a key consideration for our sustainability and in addressing security of supply.”
He said although Namcor recently posted a N$77 million profit for the six months ended 30 September 2012, the withdrawal of the mandate has resulted in a lot of missed opportunities which are impacting significantly the company’s operations and viability.
“If you look at our revenue in the years just before 2010 it will now be exceeding N$1 billion but that has shrunk by about 10%, and all the profits that have potentially gone with it. [If the mandate had not been withdrawn] we would have grown not only from a participation point of view, from a market share growth point of view, from a revenue growth point of view, but also in terms of the opportunity to grow the business book in terms of distributing supply across Namibia where it makes business sense. Those opportunities you should take them all up and try to monetise them, those are the lost ones.”
The Namcor management has already engaged the services of KPMG London to help the company define and review its mandate after the company board gave its blessings in anticipation of the return of the fuel import mandate.
“We want to understand what actually caused our position to go down to the level it did between 2008 and 2010 that led to the revocation of the mandate. We are looking at the whole downstream business – imports, logistics distribution and marketing – and how best within the confines of the law we can do it. What are the risks, what are the opportunities, what is the growth etc? For as long as we can grow the business and we apply the right strategies and seize the opportunities in competition with others, we will not survive but we will strive, that’s my belief,” Kandjoze said.
A deadline of around May/June next year has been set for the completion of the plan that lobbies for the return of the mandate.
“We are putting most of what we have in positive energy, in doing a thorough, decent and in-depth understanding of the import mandate.
“Our focus should remain on a very thorough job, a decent job, a proposition that actually makes business sense and we have taken the right steps to start tackling that course… but government should also remain aware of the realities on the ground – we are price takers, we have no storage and the game of downstream is 100% in the hands of the oil industry. The oil industry itself has its own objectives and a strategic resource such as fuel cannot be left entirely in the hands of private operators.”
So confident is Kandjoze on the return of the mandate that he said the acompany does not have a Plan B in the event that government refuses to reinstate the company’s mandate.
He said: “There is actually no Plan B other than the current work that we are doing. We have been there before, we have done this thing before, there is an expectation in the market, not that I want to take this thing for granted, no, but it is something that the board and the management of the company have applied themselves to for a successful return of the mandate.”