Staff Writer
The Ministry of Mines and Energy has temporarily suspended the issuing of fuel retail site and wholesale licenses citing an oversupply of service stations in the country.
According to the ministry, the six month moratorium has been placed on new applications as it reviews existing procedures and requirements.
“There has been a proliferation of licenses, especially retail, being issued without proper economic viability being carried out. We thus need time to institute more effective licensing procedures,” Mines minister Tom Alweendo told the Windhoek Observer.
Namibian Oil Industry Association Secretariat Chief Executive Officer, Harald Schmidt said the ministry’s decision will go a long way in bringing profitability to players in the fuel retail sector.
“There is definitely an oversupply of service stations in the country and the regulators decision in meant to allow for an audit because we are a regulated regime and the return on investment is being affected and so are the margins. We have service stations currently struggling to make ends meat,” he said.
He said the continued licensing of service stations had contributed to increased competition and declining margins for players and an investigation by the ministry will allow control on which regions require service stations.
“This should give a fair chance to all players as the regulator will be able to see which regions needs more and which has an oversupply. It’s absolutely vital that the regulator take stock because it’s not viable to have an exploiting of sites. Non-viable sites will even struggle to comply with industry regulations on safety and the regulator cannot allow that to happen, that’s the industry audit,” he said.
“There is now a big divide between viable and non-viable sites. Because we are regulated, so are our margins but if it was an open market, then prices will determine ones margins and players will compete on pricing.”
The latest entrant to the fuel retail sector, National Petroleum Corporation of Namibia (Namcor), however said the ministry decision will impact on its role out plans, which were currently on-going after opening its first retail site in November last year.
“It will definitely impact us as we were busy rolling out our service stations. We will need to have a discussion with the ministry on the decision. We have leases on some of the sites that we planned to rollout and this will definitely have an impact,” Namcor Chief Executive Officer, Immanuel Mulunga told the Windhoek Observer.
A tightlipped Mulunga said, “I cannot share on how many sites we planned but the decision will impact our plans.”
The government-owned company, which is being modeled around oil companies like Malaysia’s Petronas, which owns the Engen brand, planned sites in Oshakati, Karasburg, Opuwo, Swakopmund and Rundu.
Namibia fuel retail sector is currently dominated by Engine, Total, Shell and Puma.
