Namcor still in the red after N$1.2 billion state lifeline
Hertta-Maria Amutenja
The National Petroleum Corporation of Namibia (Namcor) remains in financial trouble despite receiving a N$1.2 billion government bailout in April 2024.
The company confirmed that liquidity problems persist and more support may be needed to settle outstanding debts.
Namcor’s board and management said the bailout was used to access commercial loans, which were mostly used to pay off overdue creditors.
“Liquidity challenges remain persistent, and support may be required to clear the remaining long outstanding creditors balances,” the company stated.
By March 2024, Namcor’s total debt stood at N$3.3 billion.
The bailout helped reduce this to N$1.6 billion. However, Namcor still owes N$800 million under a restrictive fuel supply agreement and another N$800 million to other creditors.
“The agreement is subject to high interest rates, resulting in a substantial portion of repayments being absorbed by interest charges rather than reducing the principal debt,” Namcor said.
Namcor blamed its financial crisis on governance failures, poor operational decisions, and excessive borrowing, especially within its trading and distribution subsidiary.
“Over the years, Namcor trading and distribution has recorded inconsistent performance due to a combination of serious governance lapses, non-compliance to policies and operational systems challenges,”
Some of the challenges cited include poor margin management, excessive and unprocedural credit facilities, stock theft, unauthorised asset purchases, and a non-functional ERP system that cost over N$68 million, nearly three times its initial budget.
Between 2017/18 and 2022/23, Namcor’s revenue grew from N$610 million to N$7.4 billion.
But rising costs erased those gains, leading to a net loss of N$1.26 billion in the 2022/23 financial year.
“High revenue growth alone did not translate into financial sustainability,” the company noted.
Concerns over Namcor’s finances are not new. In late 2023, New Era newspaper reported a N$1.6 billion funding gap and supplier payment delays.
The Brief also reported N$ 700 million in trading losses due to overstocking and poor pricing.
To avoid operational collapse and ensure diesel supply, Namcor signed a 24-month restrictive supply deal in August 2023 with its largest creditor, to whom it owed more than N$1.1 billion.
“Recognising the severity of the financial risk and the potential implications for national fuel security, the Government extended a N$1.2 billion bailout to Namcor in April 2024,” the statement read.
Despite the intervention, high interest rates tied to the supply agreement continue to limit real debt reduction and threaten financial recovery.
Namcor is also taking legal steps to recover money from customers who defaulted on credit deals.
As of March 2024, its overdue debtors book stood at N$841 million.
“Provisional liquidation orders have already been granted in Namcor’s favour against the principal debtors,” Namcor stated.
The company confirmed that disciplinary and legal action is ongoing over stock theft at the National Oil Storage Facility (NOSF).
Investigations uncovered manual overrides of automated systems and tampering with metering equipment.
In response to the crisis, Namcor said it is rolling out a turnaround strategy to improve governance, tighten internal controls, and restore financial stability.
It has also created two new executive roles, chief internal auditor and executive for the National Oil Storage Facility.
