Energy minister Modestus Amutse says international oil trader Vitol was awarded the tender to supply fuel to Namibia for the next three months because the company required no government guarantees.
Amutse was responding to questions from parliamentarians in the National Assembly on Wednesday afternoon.
This comes after concerns that state oil company Namcor was sidelined in the process.
“With the National Petroleum Corporation of Namibia (Namcor) [bid] there were conditions. They needed a guarantee. They can only get oil from their source with a guarantee, for obvious reasons. So that made them not qualify,” Amutse said.
He confirmed that Vitol offered to provide fuel at the basic fuel price (BFP) the government calculates each month. Namcor offered a price of 10 cents less than the BFP, but required a guarantee.
He clarified that Namcor is not an international trader, but rather a spot buyer – buying fuel at a once-off market price.
“Namcor is a spot buyer. What they do is they make an arrangement with international suppliers. But spot buying does not guarantee the price past a specific date,” he said.
Similarly, the minister announced that Starboard and SDAL Services Ltd submitted bids but also required a guarantee.
“We don’t want to risk government guarantees at this moment,” the minister said.
The last bid came from TotalEnergies, who offered a price higher than the BFP.
Amutse said arrangements are being made for a bulk supply process for fuel.
“I engaged with [fuel wholesalers] and asked them to make their offers – [regarding] the process of bulk fuel supply. They were reasoning that the population of Namibia is small, so it is expensive for them when they evacuate the oil from their sources,” Amutse said.
He defended the arrangement with Vitol, stating that Namibia’s wholesalers will be able to procure fuel at a lower price, and that the company has committed to providing fuel without premiums.
“We are better off with this arrangement. I want to clarify it is not the government that is ordering fuel from Vitol. It is just an arrangement to receive fuel at a reduced cost,” Amutse said.
The four wholesalers licensed to operate in Namibia – Vivo Energy, Puma Energy, TotalEnergies and Namcor – will be able to buy fuel at a lower price from Vitol, he said.
Vitol currently supplies 60% of fuel to Namibia’s wholesalers.
Responding to concerns about the arrangement bypassing the competition commission’s determination that Nasan Energies should be prohibited from buying fuel from Vitol, the minister said the question was “under consideration”.
“It is my understanding that they are not taking from Vitol for now. But it’s a matter that we are engaging in and having discussions on. The competition commission has made a determination, a determination that we must honour as well,” Amutse said
