Last month, deputy governor of the Bank of Namibia Ebson Uanguta was seconded as interim managing director to the National Petroleum Corporation of Namibia (Namcor).
Uanguta is expected to temporarily steer the struggling State-owned entity, which is mandated to explore, produce and market Namibia’s petroleum resources. Of late, the beleaguered entity has faced a myriad of challenges, including a low cash flow, prompting a call for a government bailout, internal fraud accusations, and a suspended managing director.
New Era business journalist Maihapa Ndjavera (MN) recently had the opportunity to sit down with Uanguta (EU) for a one-on-one discussion:
MN: How do you intend to solve Namcor’s management and financial challenges?
EU: We acknowledge the critical management and financial challenges confronting Namcor. To address these issues, we are implementing a two-pronged strategy. Firstly, we are dedicated to improving our financial health through the strategic measures outlined in our proposed turnaround strategy, aiming at stabilising the entity, improving financial ratios, and enhancing profitability. Secondly, we are focusing on reviewing our internal governance and management practices by enforcing compliance. In addition, we will embark upon efforts to create awareness of our values as well as inculcating them among staff. Organisational values such as collaboration, integrity and accountability are key on the agenda to overcome future challenges, avoid past mistakes, and secure Namcor’s ongoing success.
MN: What influence does the reported management conflict have on Namcor’s operations, and how does it affect the national oil and gas industry?
EU: As a state-owned enterprise with international dealings, Namcor takes perceived and actual ill-dealings seriously. Our reputation as an entity is in a sense our currency; we cannot afford to turn a blind eye to perceived or possible infringements to our internal policies and national legislation. Namcor maintains a history of successful partnerships with several international oil-producing companies. These business relationships include joint venture operatorships in oil blocks onshore and offshore Namibia. Our dedication to transparent dealings is unwavering, contributing to our positive relationships and the stability of Namibia’s oil and gas industry.
MN: What steps is the organisation taking to ensure good operational governance and transparency?
EU: Ensuring good governance and transparency in our operations is a top priority for Namcor. To achieve this, we have specific plans in place. Firstly, we plan to enhance our current structures and operations. This includes enhancing our risk mitigation strategies, and strengthening our governance structures to ensure we operate at the highest standards of integrity. Secondly, transparency is key to rebuilding our brand reputation, and regaining the trust of the public. We will actively engage our stakeholders about our operations, challenges and successes. By doing so, we aim to foster transparency and accountability in all our activities. As the national oil company, we recognise the importance of the support of our nation. We understand that our operations have the potential to transform the economy of our country and harness the opportunities in the oil and gas sector. Additionally, we are committed to pursuing a greener and more sustainable future, in alignment with global environmental goals.
MN: How would Namcor ensure Namibia’s oil and gas resources benefit all citizens?
EU: Namcor is dedicated to ensuring that Namibia’s oil and gas discoveries translate into tangible benefits for Namibia and her people, and this has been documented and articulated throughout our public engagement events such as the Namcor Race to First Oil held in September 2023. To achieve this, we have several plans in place. Our key focal area is working closely with the mines ministry to support the establishment and implementation of the local content policy. This policy will play a crucial role in ensuring that Namibians benefit directly from discoveries, and play an active role within the industry. It will promote the development of local expertise, job-creation and business opportunities for Namibians. We also recognise that there are significant opportunities to eradicate poverty and transform our nation through the responsible management of our oil and gas resources. To this end, we are conducting benchmarking studies of countries with successful oil and gas industries, such as Norway and Qatar. By learning from their experiences and best practices, we aim to establish a solid framework for investment in the infrastructure of our country. We are committed to ensuring that our oil and gas discoveries contribute positively to the well-being and prosperity of our nation. Namibia remains largely under-explored, standing at only 40 wells. I believe this represents huge untapped opportunities for local and international energy companies.
MN: What are Namcor’s plans to ensure Namibia’s oil and gas adventure is a success?
EU: Namcor is committed to learning from the best across the globe and to ensure that as a country, we avoid the mistakes and mishaps that happened in the countries in the oil and gas industry. The plans involve continued benchmarking, supporting government in setting up robust regulations and frameworks, emphasising and indeed enforcing transparency, accountability, and anti-corruption measures. Local content development facilitation, sustainable infrastructure investment, in line with our mandate, and aligning our strategic vision with Namibia’s long-term energy goals. Community engagement, partnerships and collaboration will ensure inclusive growth and sustainable development. Namcor remains committed to leveraging on the combination of its strength and that of its partners in getting Namibia to be the top oil frontier in Africa.
MN: Are there any intentions to increase Namcor’s 10% stake in petroleum licences?
EU: The issue of increasing the 10% shareholding in licences is a subject that is considered on a case-by-case basis and is dependent on various factors, including cost considerations, and the involvement of multinational oil companies. While the 10% shareholding is a minimum, it is crucial to be mindful of the financial and technical resources required for offshore deep-sea exploration. Namcor’s 10% interest is often on a carried basis, meaning the international oil companies pay the exploration expenses on behalf of Namcor until commercial production starts. It is important to point out that Namcor does hold significant working interest (up to 67%) in several exploration licences. Therefore, Namcor’s shareholding is not only limited to the 10%. We need to recognise that off-shore deep-sea exploration and discoveries require significant investments running into billions of dollars – which cannot be done single-handedly by Namcor and the Namibian government. And that is why shareholding dilution becomes the only feasible proposition. At present, each block and partnership is negotiated individually, taking into account the specific circumstances and agreements involved. As such, we cannot divulge any commercially-sensitive information related to these negotiations. Our approach is to strike a balance between maximising the benefits for Namibia, and ensuring the participation of experienced and financially capable multinational oil companies in our exploration efforts. This allows us to leverage their expertise, while also safeguarding the interests of our nation.
MN: Is the immense interest in Namibia’s offshore exploration warranted?
EU: Namibia’s offshore exploration has garnered recent interest due to significant discoveries, unveiling valuable hydrocarbon resources. The potential for substantial oil and gas reserves, combined with a stable political and fiscal environment, coupled with a favourable ease of doing business index rating, makes Namibia an attractive destination for exploration companies. These factors continue to contribute to the increasing attention and exploration activities on the Namibian continental shelf. I must also acknowledge joint efforts by the mines ministry and Namcor, who have been on an international crusade, marketing Namibia as the most ideal hydrocarbon destination. As a country, we have been competing with over 100 countries for some of the international oil majors you see in the country.