The National Oil Storage Facility (NOSF) in Walvis Bay, operated by NAMCOR on behalf of the Ministry of Mines and Energy, has yet to generate a profit since its commissioning in early 2021, the state-owned oil company has revealed
The multi-billion-dollar facility, whose construction began in January 2015, includes a tanker jetty, multiple product pipelines, and a terminal with a combined storage capacity of 75 million litres of petroleum products.
Commissioning of the facility began in December 2020 and was completed in February 2021, with an initial stock of approximately 37 million litres of diesel, 21 million litres of unleaded petrol, and five million litres of very low sulphur fuel oil.
Despite these modern capabilities, NAMCOR said the facility has been operating at a loss due to fees charged below market rates.
“Four years since its inception, no profit has yet been derived from NOSF operations,” the company has revealed.
NAMCOR added that the facility is currently not operating at full capacity but expects improvements once the old jetty is decommissioned and all petroleum product offloading is shifted to the new NOSF jetty, which is scheduled before the end of 2025.
A revised fee structure is expected to be gazetted.
The company faces wider financial difficulties. It recorded a net loss of N$1.3 billion for the 2022/23 financial year, mainly due to losses in its Trading and Distribution subsidiary.
“These losses were predominantly driven by NAMCOR Trading, which engaged in high-volume transactions that failed to generate sufficient margins,” NAMCOR said in a statement.
Revenue grew from N$610 million in 2017/18 to N$7.4 billion in 2022/23, but cost of sales increased even faster, reaching N$7.5 billion, erasing profits.
NAMCOR pointed to governance failures, poor internal controls, stock losses, and unauthorised credit extensions as key factors. Between early 2022 and mid-2023, the Trading subsidiary procured fuel volumes exceeding market demand, exposing the company to volatility and pushing total debt to N$3.3 billion by March 2024.
The company owed over N$1.1 billion to its largest creditor, leading to the risk of liquidation. To prevent this, the government issued a N$1.2 billion guarantee in April 2024, which was used to pay down debts. Debt has since been reduced to N$1.6 billion, but significant amounts remain outstanding.
NAMCOR is also pursuing legal action to recover N$841 million owed by customers who defaulted on credit agreements extended beyond company limits.
Fuel theft investigations at the NOSF found poor stock management and tampering with metering systems.
An unauthorised asset purchase worth N$53.2 million was nullified, and proceedings are underway to recover the funds.
The company also flagged the procurement of a non-functional Enterprise Resource Planning (ERP) system, which has cost over N$68 million, nearly triple the initial budget.
NAMCOR said it is implementing a turnaround strategy, including new senior appointments to improve governance and financial management.
“The Board and Management are working tirelessly to stabilise the company with support from the Shareholder,” the company said.
