Namcor Managing Director Immanuel Mulunga shares his story at the helm of the national oil company over the past five years.
Namibian Sun (NS): You’ve been at the helm of Namcor for the past five years. Tell us about your journey since you took over.
Immanuel Mulunga (IM): If I were to sum up my time here at Namcor in one word, I would say the past five years have been characterised by being resolute. Oil and gas is a highly complex industry and being a national oil company, we are not spared from criticism from various quarters – which is normal in this type of position. As the accounting officer, I am at the forefront of the organisation, so I am expected to absorb everything that is thrown at me, and sometimes even on behalf of others, but for me, it has been a true test of adversity intelligence. If anything, it has only made me, and undoubtedly the organisation, much stronger.
NS: What have you primarily focused on over the past five years?
IM: Over the past five years, my primary focus has been to build a strong, local, homegrown brand that is internationally recognised, and one that can position itself in a highly competitive industry. We spent a significant amount of time laying the foundation to prepare the company for exponential growth – essentially, laying the tarmac that will prepare us for take-off. Part of this, was to restructure the organisation and put the right people in the right positions. Today I am proud to say that we have managed to assemble a team that I believe will ensure a soft landing towards our vision of becoming a world-class petroleum organisation.
NS: What exactly is Namcor’s mandate and what have you done to fulfil that mandate?
IM: Our primary mandate as a company is twofold. Firstly, we have been tasked with the responsibility of exploring and harnessing the hydrocarbon potential of Namibia. Secondly, our mandate is to commercialise Namibia’s hydrocarbon resources and profitably deliver petroleum products to the Namibian market, and in so doing, ensuring security of supply of this highly sought-after global commodity. In effect, we have been tasked with delivering returns on the nation’s oil and gas potential for the benefit of all our stakeholders.
For the past five years, we have implemented innovative ways to fulfil our mandate in an extremely volatile market characterised by constantly changing and challenging market and business conditions, commodity prices, exchange rate fluctuations and most recently, Covid-19. Despite these challenges, our growth as a company is evident in:
- Having doubled our staff complement in a period of five years, which is justified by our increase in our customer base, also having entered the export market, despite Namibia being a net-importer of fuel;
- Having increased our revenue base by over 100% over the past five years, and exceeding the one-billion-dollar mark.
- Having strengthened the company’s balance sheet over the past five years where the Group’s financial position remains firm from a total asset base of approximately N$600 million to N$1.2 billion, which is an increase of about 100% as at 31 March 2020.
- This increase is mainly owed to an increase in capital expenditure, most notably the retail service stations, upgrading of existing infrastructure and investments in land, property and equipment.
NS: What are your top achievements as MD of Namcor over the past five years?
IM: Firstly, we take pride in having maintained an unqualified audit opinion on our annual financial statements since the 2015 financial year.We have nearly tripled our market share from 5% in 2015 to 13% at present. We have maintained Namcor’s position as the market leader in the supply of heavy fuel oil. We have successfully penetrated the retail market having completed four (4) Namcor service stations in Namibia in the past two years, with four currently under construction and four more planned during this financial year. We have landed some multi-billion-dollar contracts, including the highly contested N$3.2 billion contract to supply the Husab Mine (Swakop Uranium) with all its petroleum product requirements (fuels and lubricants) for five years. We have successfully farmed out two of our exploration licences to ExxonMobil, which is the world’s largest independent international oil company. We have restructured our upstream activities reviving the E & P Company and creating a new division focusing on the acquisition of production assets internationally. This will be the foundation of the next growth phase of Namcor. We have demonstrated our competence and readiness, having been chosen by the Government of the Republic of Namibia to operate the National Oil Storage Facility (manned by Namcor’s own staff), which will finally be commissioned towards the end of 2020. This will increase the country’s strategic storage capacity which will ensure Namibia’s security of supply of petroleum products into the future. We have successfully concluded the dilution of Namcor’s 54% stake in the Kudu Project to BW Kudu with the view to monetising the gas resource.
NS: How has Namcor transitioned from its role of being a regulator and advisor to the MME to being a commercial entity?
IM: First of all, I would like to emphasise that Namcor was never a regulator in the petroleum upstream or downstream sector; that role has always been that of the ministry of mines and energy. Although Namcor is designated as an advisor to MME, through the Petroleum Exploration and Production Act, with the promulgation of the Public Enterprises Governance Act, under the newly adopted Hybrid Governance Model, Namcor is now considered a full-fledged commercial public enterprise and now reports to the ministry of public enterprises.
NS: There has been a lot of mixed responses to Namcor’s decision to enter the downstream retail space. What message would you convey to the masses on why you have entered this space?
IM: Namcor has been participating in the downstream sector for quite some time in the commercial segment; however, we recently diversified into the retail sector to fulfil our downstream mandate. Compared to the commercial segment, the retail sector provides the bigger margins and this presents Namcor with an opportunity to increase the company’s profitability. As the National Oil Company (NOC), we plan to eventually dominate the Namibian downstream market, as other NOCs have done elsewhere around the world.
NS: Government has designated Namcor to operate the 70-million-litre National Oil Storage Facility and jetty at Walvis Bay. What does this mean for Namcor and Namibia?
IM: The construction of the NOSF has basically been completed by GRN and upon commissioning, Namcor will operate and maintain the facility, as decided by Cabinet. This is a mammoth undertaking and we appreciate the trust that GRN has placed on our shoulders. This is a task which Namcor has duly embraced and prepared for, over the past two years. This facility will provide Namcor with leverage to increase the company’s presence and competitiveness in the downstream space and improve the country’s storage capacity.
NS: There have been many reports about Namcor’s procurement of petroleum products. Why is your organisation procuring large amounts of fuel?
IM: Petroleum products are sourced internationally and imported in bulk via sea through the Port of Walvis Bay for purposes of economies of scale – the more products you procure at once, the cheaper it is per litre. As you are aware, Namcor was in consultation with GRN to have its 50% fuel import mandate restored; however, this was not approved by the Namibia Competition Commission due to objections from the industry. In order to remain sustainable and to add value, Namcor was left with no option but to import its own products in order to compete with the existing international oil marketing companies (OMCs).
NS: What is the current status of the Kudu Project?
IM: Negotiations are ongoing with BW Kudu to conclude a farm-in and carry agreement for the Kudu Project, and this process is envisioned to be completed by the end of September 2020. What this means is that we are restructuring the equity levels in the project to attract private-sector investors.
NS: How has Covid-19 impacted Namcor as a state-owned enterprise?
IM: With the effects of Covid-19 hitting economies and industries the world over, Namcor is no exception, but the company remains optimistic about the future. The first quarter of 2020 saw a decline in petroleum product demand and sales. Although we have seen a significant decline in revenue from product sales, the effects were circumnavigated by our resilience and quick response in activating our business continuity management plans, including aggressive cost-cutting measures. During these difficult times, as a company, we shall remain on the side of caution in exercising the necessary health and safety measures. Whilst we continue to nurse the effects of Covid-19 on the company, this pandemic has also taught us some valuable lessons. One of these lessons is to be a digitally enabled organisation, which happened to be one of our strategic pillars. The health and well-being of our staff remains our biggest priority and we will continue to ensure and maintain a safe working environment.
NS: As the Namcor managing director, what keeps you up at night?
IM: We have significant amounts outstanding on our debtors book, a situation we are currently addressing. Although we have made considerable progress, we have not yet secured all the funding required to implement our retail as well as our production asset acquisition strategy. We strongly believe that we will have our entire financing requirement secured in the next couple of months. The potential negative impact that Covid-19 could have on our operations, especially in Walvis Bay, is a cause for concern for me. The National Oil Storage Facility being a new state-of-the-art terminal and jetty presents the challenge of managing the expectations of various stakeholders such as government, OMCs, companies to be hosted in the facility and the general public.
NS: What is Namcor’s strategy going forward?
IM: Now that we have successfully developed our new five-year corporate strategy and restructured the organisation, we believe that we are on a trajectory of growth and we are well on our way to becoming a significant player in the African oil and gas arena. We have very ambitious growth targets to increase our retail market share and we will continue to aggressively roll out our retail strategy and improve on export sales and new prospects. Namcor is a respected and internationally recognisable brand and this will go a long way in helping us meet our strategic objectives.