Despite reputational damage caused by the ongoing fraud and corruption saga in which millions were reportedly stolen at an industrial scale, Namcor’s interim MD Maureen Hinda-Mbuende says the entity remains of serious strategic importance.
It is also central to the government’s upstream oil exploration efforts.
Reflecting on the work done so far since taking office about five months ago, Hinda-Mbuende oozed with confidence, reassuring that the once-troubled Namcor ship is slowly but surely approaching steady waters and is well on its way to reliving its intended mandate.
She said amongst the key interventions employed to revive Namcor’s operations are addressing governance lapses, non-compliance with policies and operational systems and revitalising the morale of employees.
“My appointment to Namcor came as a surprise, especially given the many problems that the entity was facing at the time, but me being me, I found the task to be exciting and as an opportunity to help my country in a very important area where the government is currently making a lot of investments and effort… I’m happy to say we are making great progress,” she said.
Revival
Despite the parastatal’s troubled past, the former deputy finance minister is moving with meticulous foresight to ensure that Namcor returns to its glory days.
“Petroleum exploration is the hope of Namibia, and the government is making a lot of investments in that space. The potential for economic growth and social upliftment for our people through these efforts is there, and that is why Namcor must be at the forefront of all these activities to ensure that Namibia remains the face of Africa as far as new oil discoveries are concerned. It is a good time for Namibia, and we must ensure that the world’s attention remains on our country. For me right now, the biggest task is to ensure good governance, financial stability and investor confidence at Namcor, and so far, I think we are on the right track,” she stated.
“Before my appointment, I too followed the happenings at Namcor through the media just like everyone else, but once I was told to go there, I knew things had to be done differently. When I arrived, staff morale was very low, internal control systems were not reliable, and I think for most of my colleagues at Namcor, they were very sceptical of this politician called Maureen coming to head their company. But I must really say that it has been a good journey; we are changing a lot of things as a team, and the staff’s morale is quite high now. The company’s board has truly been very supportive, and I must thank them for that.”
Reputational damage
Last year, Namcor hogged local and international headlines after the parastatal’s former managing director, Imms Mulunga, and fellow former Namcor executives were arrested for their alleged involvement in the embezzlement of millions through dubious transactions, including the N$53 million deal between Namcor and military contractor Enercon.
The N$53 million transaction, entered in 2022, was intended to allow the state-owned oil parastatal to take over the fuel supply contract and related infrastructure business with the Namibian Defence Force through Enercon, but that deal never materialised.
Enercon’s agreement with Namcor was cancelled due to military objections, but Enercon reportedly failed to repay the N$53 million to Namcor immediately. This money, it is reported, has since vanished into thin air, without a trace.
While at the helm of Namcor in 2022, Mulunga allegedly ignored internal company policies to give Enercon special treatment through credit line extensions.
In December 2023, Namcor sued Mulunga and the Elindi brothers, Peter and Malakia, as well as a retired August 26 Holdings senior executive in their personal capacities for the N$53 million losses.
It was also reported last year that Enercon had to date failed to settle fuel supplies totalling N$114.6 million to Namcor. Enercon was liquidated a few months ago.
Mulunga was also accused of committing fraud by withholding information from the company’s board and breaching conditions of his employment when he transferred funds for the purchase of an oil block in Angola.
He directed that an amount of US$6.7 million (over N$180 million) be paid from the bank account of Namcor E&P to an account of Sungara Energies Limited, a company incorporated in England and Wales, which account is held with the Mauritius Commercial Bank Ltd.
However, Namcor claimed that Mulunga was supposed to disclose his intentions about the transfer of funds before and not after he gave the instruction for payment to the finance executive.
Troubled past
Those questionable transactions, as well as other internal operational lapses, also saw Namcor posting a net loss of over N$1.2 billion during the 2022/23 financial year and facing debts of over N$800 million.
The entity’s poor performance was attributed to its trading company, Namcor Trading and Distribution, which it said caused “inadequate internal controls, system overrides, stock theft, trading losses and potential reckless trading.”
Namcor’s revenue increased significantly from N$610 million in 2017/18 to N$7.4 billion in 2022/23. However, that growth was accompanied by a steep rise in the cost of sales, which escalated by some N$7 billion from N$559 million to N$7.5 billion from 2017/18 to 2022/23.
Despite the substantial increase in revenue, Namcor did not achieve profitability. In fact, the sharpest losses were recorded in 2023 when Namcor posted a net loss of N$1.3 billion, indicating that high revenue growth alone did not translate into financial sustainability.
Alleged theft and loss of product, the acquisition of encumbered and unauthorised assets, charging of hosting fees below market rate and installation of a non-functioning ERP system are amongst the issues that contributed to Namcor’s stifling.
Several additional factors have significantly eroded Namcor’s financial position over the past five years, including oversupply of petroleum products, lack of hedging and poor margin management, expensive credit facilities from suppliers eroding margins further, excessive credit facilities that were non-procedurally granted and poor debtors’ collections.
Focused
Amidst the ongoing positive reforms, Hinda-Mbuende insists that the continuous restoration of confidence in the organisation will require consistent governance, clear accountability, and disciplined execution, not only in words, but in action.
“Another important task is also making sure that our audit reports are up to date, as they are currently lagging, and that is something that is enjoying my utmost attention. I am also happy that our political leadership, especially the president, fully understands the importance of Namcor and the role it must play in the exploration space. Being a good governance fanatic, I have always said SOEs can be profitable and operate efficiently, and I still maintain that position.”
“Recent government bailouts have also helped in lifting some burden on Namcor’s shoulders, and through those bailouts, we have managed to save around N$400 million and can now trade positively. Those bailouts were important in getting the entity out of some very unbalanced transactions and partnerships, and they have also helped with easing so many interest payments that were crippling our operations. We have also gotten an instruction to exit from the Angolan partnerships, and that process has already started.”
Going forward, she foresees a strong and resilient Namcor that will positively contribute to national development and solidify Namibia’s position in the global oil discovery frontier.
