Fuel station owners threaten nation-wide shut down

The one hundred and sixty-seven-member Fuel and Franchise Association (FAFA) of Namibia on Wednesday held a meeting with its members and various stakeholders who threatened industrial action in the form of a nation-wide shut down of fuel stations across the country.

The meeting which took place in Windhoek discussed pressing industrial concerns which include the raising of the retail margins for service station owners who complained that they are operating at a loss and are months away from bankruptcy if government as the regulating authority of the fuel industry does not intervene.

In a telephonic interview with Confidente, Chairperson of FAFA, Hennie Kruger, said they are operating in a declining market and government as regulator needs to come to the table and solve their problems amicably before they are driven to extremes.

He also bemoaned the fact that government through its hundred percent shareholding in NAMCOR has become both a player and a regulator in the same industry.

“The concerns the ‘players’ raised were how new licenses (fuel) were issued in a declining market” Kruger said.

“Government is a regulator in the fuel industry.

They decide where, when and with who you can do business, now they (NAMCOR) open a site right across another retail site, the question is how was that assessed and is that not a conflict of interest”, Kruger questioned.

Communications specialist at NAMCOR Utaara Hoveka said as a State Owned Enterprise (SOE) governed by the petroleum act the company is within its mandate to operate fueling stations.

He further informed Confidente that NAMCOR has eleven service stations and is busy constructing another ten at various sites across the country.

“NAMCOR is not involved in unfair, anti-competitive practices or conflict of interest when it ventures into service station franchising. We are carrying out the same business like other players in the market such as Puma, Engen, Vivo and Total. The only difference is that we are owned by the Namibian state”, Hoveka said.

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Hoveka further said NAMCOR cannot be classified as a monopoly because it is competing with the likes of Puma, Engen and Total who also own oil terminals and are involved in bulk supply (wholesale) and franchising (service station ownership).

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Independent analyst, and energy expert, Mulife Siyabango, told Confidente that what NAMCOR is engaging in is called Arm-Length Investment.

“They are double dipping in whole sale and retail and also taking from the pump price”, Siyabango explained.

“NAMCOR gets money from the pump levy which they get without even selling a liter of fuel, they also collect levies at other independent fuel service stations, every time you fill up NAMCOR collects money”, Siyambango continued.

“NAMCOR is mandated to control the fuel storage of which industry players are compelled to buy from and then they went into downstream to establish service stations which are in direct competition with independent fuel suppliers who don’t have the capacity of the 70 million storage and who don’t benefit from the pump price”, Siyabango lamented.

Siyabango said that NAMCOR is not behaving in a transparent or fair manner because they are bullying smaller independent fuel suppliers whilst they are backed by the state.

“Arm-length investment is when you go beyond what you are supposed to be doing to go eat at the other ones share”, he said.

Siyabango said that there is a real threat that in the long run we may end up with a single petrol brand in the country which is the scenario that Kruger alluded too at the meeting with industry participants.

“It is very bad for the country because (remember) there is nowhere in the world where we have seen a government fuel parastatal company succeeding; even SASOL failed to run its own service stations in South Africa. SASOL became a disaster!”, Siyabango

“In order to maintain these service stations, NAMCOR will have to go back to treasury and ask for subsidies to maintain the service stations because in the next twenty-five years they will be dilapidated and the tax payer will have to foot the bill,” the analyst remarked.

Secretary-General of the Namibia Bus and Taxi Association (NABTA) Pendapala Nakathingo said they participated at the meeting with the concern of all Namibian livelihoods.

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As an association that represents one of the industries that consumes the most fuel they are aware of the negative repercussions a nation-wide lockdown may have and they believe a strategic partnership with FAFA to reach mutual goals is possible.

He said NABTA has a membership of over thirty thousand members and they are willing to mobilise in the interests of the Namibian people if a nation-wide shut down is embarked upon.

The meeting made a preliminary resolution to embark on the shut-down subject to two votes from members AGRA and AGRI-KAAP who’s representatives said they would have to consult their boards before making a decision on whether to support FAFA or not.

NAMCOR has been accused of granting new licenses to politically connected individuals such as Former Vice-Chancellor of the Namibia University of Science and Technology (NUST) who entered the fuel business after the NUST Council refused to grant him an extension on his contract.

He had been at the helm of the University since its inception as a polytechnic and wanted to stay on besides the fact that he had reached retirement age.

He said at the time that he believed he was the only one capable of leading the University but has since ventured into fuel retailing through NAMCOR.

His Waterberg Service Station is situated between Khomasdal and Otjomuise in Namibia’s capital, Windhoek.