Namcor’s management woes threaten emerging oil industry – economist

The management and financial issues currently facing the National Petroleum Corporation (Namcor) pose a significant risk to Namibia’s new-found oil resources, economist Robin Sherbourne says.

Sherbourne, in a report released yesterday by the Institute of Public Policy Research (IPPR), says good governance will play a critical role in ensuring Namibia’s oil and gas discoveries are to the country’s benefit.

“Namcor will play a critical part in ensuring this takes place. Yet its track record has not been good. The government and Namcor would have to raise their game and break with past practices if Namibia’s oil and gas experience is to be a positive one,” he says
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Namcor, the government’s primary player in both the upstream and downstream segments of the petroleum industry, holds the responsibility of oil and gas exploration, drilling, wholesale, and distribution within the nation.

However, the company has encountered financial difficulties and has been embroiled in a management dispute since April, following the suspension of its managing director, Immanuel Mulunga, by the company’s board of directors.

This suspension was the result of allegations of an unauthorised payment of N$100 million for an oil block in Angola.

Despite these allegations, the Anti-Corruption Commission cleared Mulunga of any criminal wrongdoing last month, asserting that his actions were in the best interests of the state-owned enterprise and the nation.

While Mulunga’s suspension was initially scheduled to expire on 30 September, the board has chosen to prolong the suspension.

“As of now, Mr Mulunga remains under suspension until further notice. The board of directors and executive management are actively overseeing the situation, and we assure you that updates regarding this matter will be communicated to everybody as soon as it reaches its conclusion,” Namcor spokesperson Paulo Coelho said last week.

Ever since offshore oil and gas reserves were uncovered in early 2022, Namcor has become a focal point of enthusiasm within the global oil and gas sector.

Sherbourne says ironically this development coincides with one of the most severe crises in Namcor’s already tumultuous history.
“The experience of many countries which have discovered oil and gas – especially many in sub-Saharan Africa – has not been a particularly happy one,” he says.

Sherbourne also highlights that while classified as a commercial public enterprise under the 2019 Public Enterprise Governance Act, Namcor has never operated as a fully commercial entity.

It primarily covered its losses by imposing additional fuel levies on consumers or by entering the fuel retail market.

In a statement issued on Monday, Namcor’s acting managing director, Shiwana Ndeunyema, confirmed that the parastatal receives about N$10 million from the Ministry of Mines and Energy as a portion of fuel levies collected from motorists, but refuted that it merely survives off this.

“We operate within a competitive market and our financial sustainability is achieved through a combination of business operations and commercial activities that do not exclusively rely on government subsidies,” he said.

Ndeunyema said in consultation with its primary shareholders, Namcor has been proactive in managing these hurdles, steering the company on a positive growth trajectory.

“The current challenges we face are being addressed comprehensively, and we remain dedicated to the long-term sustainability and success of our operations, with the invaluable input and support of our shareholders,” he said.