The National Petroleum Corporation of Namibia (NAMCOR) has posted a net loss of N$1.26 billion for the 2022/23 financial year, largely due to the underperformance of its trading subsidiary.
The state-owned oil company said its financial troubles are primarily linked to the operations of NAMCOR Trading and Distribution.
The company cited “serious governance lapses, non-compliance with policies, and operational systems challenges” within the subsidiary, which has been at the centre of multiple costly failures.
These include stock theft, weak internal controls, unauthorised asset purchases, reckless fuel procurement, and the extension of unprocedural credit facilities to customers, many of whom have since defaulted.
Despite increasing its revenue from N$610 million in 2017/18 to N$7.4 billion in 2022/23, the company said the losses stemmed from an overly aggressive fuel procurement strategy that saw it acquire volumes well beyond market demand.
“This overexposure contributed to severe cash flow constraints, causing NAMCOR’s total debt to escalate to approximately N$3.3 billion by March 2024,” the company said.
By August 2023, NAMCOR had entered into a restrictive 24-month supply agreement with its largest creditor to avoid collapse, after accruing more than N$1.1 billion in debt to that supplier.
The Ministry of Finance and Public Enterprises stepped in with a N$1.2 billion government guarantee in April this year, enabling NAMCOR to secure commercial loans. The company said the funds were used to settle critical debts, including a N$500 million payment to its main supplier, reducing total group debt to N$1.6 billion. However, overall liabilities remain at similar levels.
“Strict austerity measures have since helped reduce debt further. However, NAMCOR still owes around N$800 million under the restrictive supply agreement, which carries high interest rates. An additional N$800 million is also owed to other creditors,” the statement noted.
NAMCOR added that it is engaging with government to address the remaining debt burden while working to safeguard the country’s fuel security.
In addition to its own debt, NAMCOR revealed it is owed N$841 million by trade debtors, much of it arising from the unprocedural credit facilities previously extended to customers. Legal proceedings have been launched to recover the outstanding amounts, with provisional liquidation orders already secured in several cases.
NAMCOR also confirmed that investigations are ongoing into stock losses and product theft at the National Oil Storage Facility (NOSF), which it operates on behalf of the Ministry of Mines and Energy.
The company said findings so far point to poor stock control, manual overrides of automated systems, and tampering with metering equipment.
It further flagged the unauthorised purchase of assets valued at N$53.2 million without board approval, as well as the procurement of a non-functional Enterprise Resource Planning (ERP) system.
The system’s cost escalated from an initial N$25 million to more than N$68 million, and it has yet to become fully operational.
The NOSF facility itself has not turned a profit since its commissioning in 2021. NAMCOR attributed this to low hosting and pipeline usage fees, noting that a fee review is under way and new rates could be introduced in the fourth quarter of 2024.
Despite these ongoing challenges, the company said it is rolling out a turnaround strategy, including the strengthening of governance frameworks and the appointment of key executives such as a Chief Internal Auditor and an Executive for the NOSF.
“The Board and Management are working tirelessly to address these challenges in an effort to stabilise the company with the support of the Shareholder,” NAMCOR said.
