Namibia, Angola oil deal aborted

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By Timo Shihepo

Windhoek - At a time when Namibian motorists are dreading fuel price increases every month, the Namibian government has revealed that the proposed talks to import crude oil from Angola have broken down with no resumption insight.

In 2013, the then Namibia minister of mines and energy, Isak Katali led a delegation to Angola to hold talks with the Angolan delegation led by the then minister of petroleum, Jose de Vasconcelos with the interest of buying crude oil from Angola.

The talks were also extended to oil refining, the construction of a storage terminal and negotiations on a memorandum of understanding. In an effort to speed up the process, Vasconcelos, at the time, advocated for a close cooperation between the national oil companies, the National Petroleum Corporation of Namibia and Sonangol of Angola.

However, five years later, not only that deal died in its infant stage but there are also no indications that talks will resume sooner or later. “There was never a Namibia-Angola deal. There were discussions with Angola to buy Angolan crude oil and have it refined somewhere. It did not materialize. There is nothing being discussed currently,” Namibia’s Minister of Mines and Energy, Tom Alweendo, told The Southern Times this week.

As a result, Namibia continues to spend about R750 million per month on importing fuel into the country. Importation of fuel is done by the private sector companies, namely Engen, Total, Shell and Puma. Namibia’s fuel is imported all over the world, but mostly from Singapore.

It is news that is not music to the motorists’ ears, who have been enduring torrid times with fuel price increases almost every month since the beginning of the year. In February, a litre of unleaded petrol used to cost R11.70 but it is now costing R14.37 per litre. Diesel used to cost R11.73 per litre in February but it now costs R14.96 per litre. Namibia’s petrol prices are very high to the end consumer because of the levies and taxes added onto the normal price.  When a customer is fuelling at a service station, 55% goes to the cost of fuel at which it was bought, including the prescribed industry margin of R1.00; while 45% goes to various levies and taxes.

In February 2018, government increased tax on fuel. It said this was necessary to generate additional revenue for the state.

“The challenge is that Government has no control over the international fuel prices. Do we expect the petrol prices to normalise by next year? This will depend on what happens to the international crude oil price,” said Alweendo.

Although fuel prices have been increasing for the past several months, the energy ministry said it has not been passing on the full increases to the consumers. Over the past months, it says, over R470 million has been spent from the National Energy Fund to fund the fuel price increases.

It said the price increases have been caused by the global price per barrel of refined oil and the exchange rate between the Namibian Dollar against the US dollar. Another factor affecting the fuel prices is also the current shortage in the global market after Iran’s supply was reduced by the sanctions imposed by the US.

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