By Edgar Brandt
WINDHOEK – The first-ever petrol station belonging to the National Petroleum Corporation of Namibia (Namcor) should have been operational by December 2013 already but due to logistical challenges the company has now set June this year as launch date for what will be a milestone.
In fact, Namcor has already received land at Hosea Kutako International Airport where the very first flagship service station, constituting an investment of N$12 million and bearing the Namcor flag, will be established.
“There might be a bit of a delay but I think we should apply ourselves to deliver this,” the company’s managing director Obeth Kandjoze told New Era on Friday.
Kandjoze explained that Namcor is finalising a business plan and analysis study, being conducted by PwC in Cape Town, to come up with a precise plan on how to establish depots and detailed legislation to distribute petrol and oil throughout the country, besides other supplies and services.
“That is a major expectation from a plan we initiated last year to look at the bottom line potential of each of the downstream subsections, including 50 percent import, bulk storage as a holding facility, depots and our logistics in fuel distribution and certainly service stations,” remarked Kandjoze.
The study that will be submitted to government for final approval will also determine if each of the intended Namcor service stations will be able to operate as viable, stand-alone businesses.
The Namcor MD elaborated on his company’s approach to service stations, saying the buying power in an area will determine the type of structure or facility to invest in. He noted that instead of following the typical franchisee approach, knowing that cost is a consideration, Namcor has classified many different types of models of service stations depending on whether the economy in a specific area can afford the proposed infrastructure.
“So, in conjunction with government, we are considering anything from a top facility service station that caters to a large population, to the small village service station that maybe needs something totally different, like a canopy and two pumps where people can get fuel. This would range from an investment in a N$30-million facility to a N$750 000 facility. So we are developing a cluster of franchise models that will be directly linked to buying power,” noted Kandjoze.
“We need to encapsulate Namcor in a manner that it becomes a world-class organisation. That’s part of our vision. World-class means we must strive to be a BP, Shell, Exxon type of company. It’s a long shot but it’s a dream well worth having today because that guides our direction in wanting to attain that sort of participation.”
Consistently growing commercial demand in Namibia has been identified by Namcor as a potential opportunity to grow its downstream revenue. Growth in domestic demand for petroleum products has resulted in strong historic and forecasted growth in commercial and retail sales. Total distribution of petroleum product volumes are expected to grow by approximately 4.6 percent per annum until at least 2018. This demand is driven by growth in a number of key areas, including manufacturing and mining, with the recent opening of a number of new mines.
According to Namcor’s Interim Strategic Plan (April 2013) the organization’s participation in distribution and marketing can increase security of supply as well as present the visible participation of a national player to provide a stable revenue stream. Furthermore, Namcor says it will be ideally positioned to supply areas considered uneconomic by major private sector players.
Commenting on the oil price of below US$50 per barrel, compared to a year ago of US$115 per barrel, Kandjoze said this has serious implications for the oil and gas industry throughout the world.
“A year ago break-even would have been around US$90 per barrel and with this oil price of below US$50 means that profits or break-even is now so affected to the extent that you have to review your expenditure framework, your employment outlook and all the rest of that because that money is no longer there. So it is a big issue worldwide,” commented Kandjoze.
The MD also mentioned Namcor’s depot capacity, which is estimated to be around 18 million litres and has remained stable since 2009.
To capitalise on the growth in demand Namcor is currently constructing an additional depot in Walvis Bay and investigating the construction of additional strategic storage facilities in Windhoek, Ondangwa, Luderitz and Gobabis.