Namibia: Motorists to Pay N$7 Billion for Fuel Storage
The N$5,6 billion fuel storage project, which is yet to be handed over to the Namibian Petroleum Corporation of Namibia (Namcor) is set to be funded by motorists through a 60 cents per litre fuel levy.
The government, through the Development Bank of Namibia, aquired two loans from the African Development Bank (AfDB) – one for N$2,8 billion and another for N$1,5 billion.
Information leaked to The Namibian shows that motorists and the public will fork out N$55 million a month to repay the loan, before the storage facility starts operating to sustain itself.
In a telephone interview with The Namibian, Ministry of Finance chief public relations officer Tonateni Shidhudhu confirmed the repayment of the loans by motorists.
“The 60 cents per litre of fuel is a dedicated levy to repay the loans used to construct the fuel storage facility. The two loans will be repaid over a period of eight to 13 years. Yes, since 2018, the National Energy Fund (NEF) has been repaying these loans utilising the dedicated levy,” Shidhudhu said.
Although the ministry is not keen on providing detailed figures, The Namibian has it on good authority that for the N$2,8 billion loan, the government is repaying N$30 million per month for 13 years, while the N$1,5 billion loan is being repaid at N$25 million a month for eight years.
This means that a whopping N$55 million will exit government coffers to the AfDB and the Standard Bank every month.
The government has also committed to an interest of N$2,7 billion, which brings the total repayment of the two loans to N$7 billion.
Meanwhile, the government has since indicated that it does not have funds to stock the fuel storage, leaving Namcor to plead with the private sector for a fill-up.
Shidhudhu explained further that DBN is optimistic about the government repaying the two loans.
“It is unfortunate that the conditions of the lenders are that there is no provision within the loan contract to share with the public the interest and the repayment of the loan. Hence we cannot give you the figures. DBN is so far optimistic that NEF will be able to pay the loans on time,” Shidhudhu said.
The government’s debt to GDP currently stands at 49,3%, according to the Bank of Namibia’s third quarterly report of December 2019.
The national debt is projected to increase to around 52% this year.
The delay in completion and handing over of the facility has resulted in Namcor employees being paid to twiddle their thumbs instead of running the facility.
The 24 employees were hired in September 2019 on a permanent basis.
The agreement contract between the government and the contractors projected that the facility would be commissioned by May 2019. It was postponed to September 2019, before a new date was set for March 2020.
Government sources said the delay in completing the project has caused panic among top government officials who suspect another delay after March.
Another source said that the project is ‘far from completion’ while adding that it was done ‘upside down’.
“What is of concern is that the project is just not nearing completion. Namcor has been waiting since September last year to operate the facility and the company has appointed two dozen employees who are being paid while there’s no income from the facility.
The tender for the construction of the project was awarded to local company Babyface Civics owned by businessman, Vaino Nghipondoka in a joint venture with a Chinese company-CHEC in 2014.
Speaking to The Namibian on the matter, Namcor managing director Immanuel Mulunga confirmed the appointment of 24 employees to operate the facility.
“Namcor is looking forward to the commissioning of the national oil storage facility before the end of March 2020. Namcor and MME have been hard at work to iron out the remaining issues that will lead to the speedy completion and handover of the facility to Namcor.
“We employed competent staff towards the end of last year in anticipation to assume our role as operator of the facility,” Mulunga said.
Contributing to the delay in completing the project, The Namibian is informed, is the fact that the government has not paid the Chinese company for the additional land they purchased for the oil terminal, as leverage to keep the state hostage.
Sources within the ministry of mines indicated that minister Tom Alweendo has written a letter of protest to the Chinese embassy for them to speed up the project.
However, sources say that CHEC has not responded yet.
Executive director in the ministry of mines Simeon Negumbo confirmed that the repaying of the DBN, Standard bank and AfDB loans will be done through the 60 cents per litre fuel levy.
“Yes, the levy has been in place for some time now and is ring-fenced to repay the loans, which the National Energy Fund repays to the lenders,” Negumbo said.
Negumbo added that the outbreak of the coronavirus has affected the completion as Chinese experts who will carry out final testing must come to Namibia.
“What remains to be seen is how the coronavirus outbreak will affect completion, as many vendors and experts must arrive from China to carry out the final testing procedures and provide final training to Namcor staff, without which they cannot operate the facility,” Negumbo said.
Source: The Namibian