The National Petroleum Corporation of Namibia (NAMCOR) is facing serious financial problems after reporting a loss of N$1.26 billion for the 2022/23 financial year.
The loss was mainly caused by NAMCOR’s risky fuel buying strategy, where the company bought much more fuel than what the market needed. This mistake led to high debts, with total borrowings reaching N$3.3 billion by March 2024.
Even though NAMCOR’s income increased from N$610 million in 2017/18 to N$7.4 billion in 2022/23, the company struggled with cash shortages. In August 2023, NAMCOR signed a strict 24-month supply agreement with its biggest creditor to prevent collapse, after owing them over N$1.1 billion.
In April 2024, the Ministry of Finance and Public Enterprises gave a N$1.2 billion government guarantee, helping NAMCOR to get loans from banks. This allowed the company to pay some urgent debts, including N$500 million to its main fuel supplier. The total group debt dropped to N$1.6 billion, but overall liabilities remain high.
NAMCOR said it still owes about N$800 million under the current supply deal and another N$800 million to different creditors. The company is talking to the government to help solve its debt problems.
Additionally, NAMCOR reported that it is owed N$841 million by its customers, due to past poor credit decisions. Legal actions have started to recover these debts, and some court orders have already been given to recover money.
NAMCOR also revealed ongoing investigations into fuel losses and theft at the National Oil Storage Facility (NOSF). Initial results showed weak stock controls, manual changes to automated systems, and tampering with fuel meters.
The company also flagged other issues, including the purchase of assets worth N$53.2 million without board approval and the failed installation of an Enterprise Resource Planning (ERP) system. The ERP system’s cost increased from N$25 million to N$68 million, but it is still not working properly.
NAMCOR further explained that the NOSF has not made a profit since it started in 2021, mainly because of low fees charged for storage and pipeline services. A review of these fees is expected later in 2024.
Despite these challenges, NAMCOR said it is working on a turnaround strategy. This includes improving leadership, hiring new executives, and strengthening internal controls to protect the company’s future and ensure fuel supply for the country.
