International oil trader Vitol has demanded additional compensation from the government for the fuel it has brought into Namibia.
The company has been awarded the sole right to supply fuel to the country for three months. After Vitol sold less fuel than expected, it requested compensation from Namibia.
Responding to questions from The Namibian on Thursday, executive director of industries, mines and energy Moses Pakote confirmed the request and said the government had extended Vitol’s right to supply fuel for one month.
“This [October extension] should not be interpreted as a commitment by the government to pay for fuel that was not purchased; rather, it is a commercial accommodation within the framework of the emergency fuel supply arrangement,” he said.
Pakote described the extension as a “once-off final arrangement” that will not be renewed beyond October.
COMPENSATION DEMANDS
Vitol was awarded the right to supply all of the country’s fuel earlier this year in an emergency procurement process.
Under the agreement between the Namibian government and Vitol for the months of July to September, Vitol was to supply “100% of Namibia’s fuel requirements at [the basic fuel price]” without supplier premiums.
According to Pakote, Vitol was only able to supply 70% of what it expected to sell. The company said not all oil companies requested fuel from them.
“Only about 70% of the volumes were supplied under the arrangement. This resulted in claiming commercial exposure in relation to the capacity and supply arrangements put in place for Namibia by the supplier,” Pakote said.
In that fuel supply arrangement, there were no financial guarantees by Namibia.
The government did not guarantee that it would buy a specific amount of fuel from Vitol. It did not commit to buying fuel that was not nominated by the oil companies in the country either, Pakote said.
Nominating fuel is the process through which oil companies operating in Namibia tell the oil trader (Vitol) how much fuel they want for the month.
Vitol says it has suffered commercially because there is a significant difference between what it thought it would sell and what companies have nominated, Pakote said.
“Having considered the circumstances, the government resolved to accommodate this commercial interest/claim by extending the interim arrangement for one additional month to October 2026,” he said.
The Vitol group did not immediately respond to questions sent to them yesterday.
NEW SUPPLY
The executive director said the ministry would bring in fuel through a new supply agreement after October.
“For the period 1 November 2026 to 31 January 2027, the government has further resolved to initiate a request for proposals to secure bulk fuel supplies from eligible suppliers,” Pakote said.
This will give suppliers a chance to compete in a new procurement process.
After January, Pakote said the government expects to introduce its new bulk petroleum import coordination framework, which has not yet been released.
ACCOUNTABILITY
Independent Patriots for Change shadow minister for international relations Rodney Cloete in a press release on Friday says the decision to extend the agreement with Vitol raises serious concerns.
Responding to questions from The Namibian yesterday, Cloete said the decision by the government to request new proposals for November “is welcome”.
“However, when will that process start, who can participate, and will suppliers have enough time to arrange deliveries? We should not reach the end of October and be told another emergency arrangement is necessary,” he said.
On Friday, Cloete called for minister of industries, mines and energy Modestus Amutse to table the extension instrument before the parliament.
“What did the government agree to for October, and does Vitol still have a claim against it?” he asked yesterday.
“Of course, Namibia needs a reliable fuel supply. But the government also needs to explain why extending this arrangement was necessary, what other options it considered, and how the terms protect consumers,” Cloete said.
REGIONAL PATTERNS
When Namibia’s supply arrangement was announced in May, several members of the parliament questioned Vitol’s international record.
Amutse assured parliamentarians in the first week of June that the supply deal offered by Vitol was the best option for the country.
According to Bloomberg reporting in August, Vitol’s position has strengthened in eastern and southern Africa since the start of the conflict in the Middle East in February.
Vitol is the sole fuel supplier to five African countries, including Namibia, Zambia and Mozambique.
The Bloomberg investigation says most African countries are paying high fuel prices for Vitol supply and that those supply arrangements have been made outside of normal procurement processes.
