The Ministry of Industries, Mines and Energy has awarded global oil company Vitol an exclusive fuel supply deal from July to September.
Mines minister Modestus Amutse says the government has chosen Vitol because it has offered to supply all the country’s fuel at the standard price without extra charges or requiring taxpayer support, while other suppliers attached conditions to their offers.
“What set the offer from Vitol apart was that it met the country’s fuel requirement in full: fuel supplied at the basic fuel pzice, with no premium added on top and no public money required,” the minister says.
The ministry says it engaged with the local fuel industry through the Namibian Oil Industry Association (Noia) before seeking bids from suppliers to meet the country’s fuel requirements.
“The ministry set out its intention to consolidate our national fuel requirement, to capture the benefits of economies of scale, and, most importantly, to remove the premiums charged on top of the basic fuel price,” Amutse says.
According to the ministry, the objective of the procurement model was “to protect economic stability and the welfare of our people” by securing fuel at the lowest possible cost.
The ministry says it had formally invited members of the industry to participate under the proposed terms and received a number of submissions from both local and international suppliers.
Amutse says other bids contained additional conditions that would have increased the state’s exposure to financial risk.
“Other offers carried conditions, such as guarantees or financial assurances,” he says.
The government has argued that buying fuel at the basic fuel price without additional mark-ups could help contain fuel costs in Namibia, where fuel prices have a direct impact on transport costs, inflation and the broader economy.
Vitol is a global energy and commodities trading company headquartered in Geneva.
It is one of the world’s largest independent traders of crude oil, petroleum products, natural gas, power and other energy commodities.
The company operates globally and supplies fuel to governments, national oil companies, airlines, shipping companies and fuel distributors.
LOCAL FOOTPRINT
Vitol operates indirectly in Namibia via downstream investments and regional supply chains through Validus Energy.
Records show that Vitol holds a 70% stake in Validus Energy Namibia, while Millennium Investments holds 30%.
Validus Energy, in turn, has been involved in fuel storage and supply contracts in Namibia.
Millennium Investments is controlled by businessman Mathews Hamutenya, a long-time player in Namibia’s energy sector and former deputy chairperson of the National Petroleum Corporation of Namibia.
His son, Miguel Hamutenya, is the founder of Nasan Energies and group chief executive of Millennium Investment Holdings.
Miguel’s Nasan Energies recently became one of Namibia’s largest fuel retailers after acquiring 52 service stations from Vivo Energy Namibia.
Vitol was one of the companies that acquired Shell’s downstream operations in Namibia in 2012 through the creation of Vivo Energy.
According to a Namibia Competition Commission’s ruling, Nasan Energies is currently restricted from sourcing fuel from Vitol-linked entities for a period of five years, due to concerns about market concentration.
The commission says the restriction is intended to prevent indirect supply relationships that could affect competition in the fuel market.
