ONGWEDIVA – With fuel becoming increasingly unaffordable, smuggling of the commodity across the border from Angola has not just caused skirmishes between locals, the police and smugglers, retailers in northern Namibia are closing their businesses while others are left teetering on the brink of bankruptcy.
They simply cannot compete with the price of “Ngungula”, the colloquial name locals have given the cheap fuel from Angola that is smuggled across the border at prices way below the local fuel prices.
In the last year, the petrol price in Namibia has almost doubled from around N$12 to around N$22 per litre.
Asked for a comment, the Fuel and Franchise Association (Fafa) Chairman Hennie Krüger said the association has been addressing the line ministry on the issue since 2018.
“We have alluded to them that the issue of new licences and the proliferation of services stations amongst certain areas is affecting the profitability of the retailers,” said Krüger.
He noted that retailers in the north are not only burdened by the fuel price hike but also the smuggling of fuel.
“It has critically affected them, but the authorities have not attended to the issue,” he said.
Generally, he said the profitability of fuel retailers countrywide has been under severe strains for the past three years and that is caused primarily by the ministry not adjusting retailers’ margins and secondly continuously issuing new licenses to new entrants in an already saturated market.
“And of course, the vertical integration by fuel wholesalers into the retailer arena by capturing retail businesses and also the banks taking a large chunk of profits of fuel retailers, so all those elements together have caused the retailers to struggle,” he added.
Although he did not have an exact number of how many service stations have closed, Krüger said so far, he only knows of 20 retailers countrywide who have approached the association while many others are also struggling to stay afloat.
“It is becoming a national disaster. So many retailers have closed, and it is purely because of the authorities not acting timelessly,” he said.
New Era observed that majority of the service stations closed, are in Ohangwena region.
Taxi drivers in the area New Era recently interviewed said the Angolan fuel cost around N$300 for 25 litres and last longer than the Namibian version, which costs double that amount.
While Namibia already grapples with high unemployment and economic decline, this year brought another challenge: escalating fuel prices. However, service station owners are not benefitting from the price increase and had to threaten strike action for government to increase their share of the pump price. The service stations are hit hard by a narrow profit margin from fuel sales and illegal cheap fuel imports from Angola.
Speaking to New Era, Jafet Nakamwe, who owns two service stations in the north, said one of his businesses situated in Oshikango has not been in operation for three months while another one in Oshana region is also on the verge of closure.
“The surge in fuel price is killing our businesses,” he said.
Nakamwe said for the past year his fuel businesses have not been making any profit and he has been funding it with profits from his other ventures.
“Things have been getting worse over the years and I have been running on a loss for quite a long time. While my business in Oshikango has closed completely, the one between Ongwediva and Ondangwa is also not doing well because the verification of the fuel pumps is too high and we are not pumping that much,” he lamented.
Nakamwe has been in the fuel retail business since 2008.
He blamed authorities for failing to monitor the crossing of people to and from Angola, saying the sales of illicit fuel is also burdening their businesses.
“Majority of vehicle owners fuel up in Angola and our regular customers who were taxi drivers now only use smuggled fuel. People go into Angola whenever and at whatever time they please because there is no borderline in some areas,” he added.
He believes that although the fuel hike has affected all service stations countrywide, those in areas such as Windhoek are not feeling the pinch, as they still have their consumers.
“We are hit harder because our customers have resorted to “Ngungula”. I am assuming that 90% of vehicles in the north are running on fuel from Angola,” he said.
Sharing the same struggles is Kapali Hamukwaya, who also runs a service station in Omafo, Ohangwena region.
Hamukwaya’s business has also been closed for the past five months.
According to him, the sales of fuel have reduced from 200 000 to 40 000 litres per month, or sometimes they only sell 30 000 litres.
As service stations keep closing, the workers are also losing their jobs in the process.
Nakamwe said of 70 workers, 20 have lost their jobs while the rest are being paid below their grades.
“It is a situation beyond our control,” he said.
Meanwhile, Hamukwaya, who initially employed 23 workers, is only left with seven who are not retrenched but are on standby in case the situation gets better.
“Some of these people have been working for me for so many years and it is hard to let go of them,” he said, adding that this is the first year since he ventured into this business that he could not pay salaries for his workers.
The Engen service station in Eenhana in the Ohangwena region has recently been closed after its employees downed tools demanding increments.
Approached for a comment, service station owner Mike Mukete refused to comment on the matter.
Last month, service station owners threatened a nationwide shutdown.
The proposed strike was a result of the fact that the various parties involved in the regulation of fuel prices and margins apparently refuse to acknowledge that the rising fuel price, with no relief for service station owners, could cause numerous service stations to close down permanently.
In the same month, the Namibia Transport and Taxi Union (NTTU) also threatened to go on strike for an indefinite period, depending on the government’s response to their request for a 40% taxi fare increase.
Early this month, the Ministry of Mines and Energy announced that the fuel price remains the same during August.
The price of petrol price is N$22.28 per litre and the diesel price is N$22.77 per litre at Walvis Bay.
However, the dealer margin has been increased from 113 cents per litre to 163 cents per litre and involves the profit or revenue service station owners receive per litre of petrol or diesel sold to customers.
The ministry has also extended the temporary reduction of levies imposed on fuel.
Meanwhile, Ohangwena crime investigations coordinator Deputy Commissioner Zacharia Amakali said the police have been fighting cross-border crimes including fuel smuggling and they will continue doing so.
“The smuggling of fuel is continuing but as of late, we have not confiscated many containers as we did in the previous months. So I can say, it has reduced a bit,” he said.