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(Bloomberg) — Namibia’s decision to arrange an emergency fuel-supply deal with Vitol Group has raised questions in the country, including from a politician, over how the process was conducted.
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The Ministry of Industries, Mines and Energy on Saturday announced the deal for the trader to supply fuel from July through September as part of an effort to mitigate price shocks for oil products caused by the Iran war. Namibia consulted governments, international oil firms and the local industry to keep fuel prices as low as possible, minister Modestus Amutse said that day.
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Rodney Cloete, a member of parliament, said in a statement Tuesday that “the government must explain why a strategic, three-month national fuel supply was awarded” without a more competitive process. A former acting managing director of Namibia’s state oil company said the deal should be examined.
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African nations largely rely on gasoline and diesel imports to meet demand, and are taking measures to try to ease the impact of surging oil prices and supply curtailments caused by the Middle East conflict. Suppliers typically include commodity traders and international oil companies.
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Amutse said on Saturday that a surplus of oil products the country held before the conflict escalated is “almost exhausted,” and that Vitol’s offer was the best of several received from other suppliers. Vitol said that it “complies with the applicable laws, regulations and procedures required by the local authorities.”
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“In any jurisdiction it is the prerogative of the relevant authorities to determine the structure and mechanisms of its energy system,” the commodity trader said in a statement.
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Other Criticism
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“It was an uninformed decision,” Maureen Hinda-Mbuende, a former acting managing director of state oil firm Namcor and a former deputy minister of finance, said of the deal. She said it should be put on hold and examined.
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“The decision to grant a single foreign entity exclusive rights to import fuel into Namibia presents significant risks to national energy security, economic stability and consumer welfare,” Hinda-Mbuende said by phone on Wednesday. “It’s effectively handing over the whole industry.”
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When asked to comment about the deal process on Wednesday, Amutse dismissed criticism about any potential issues.
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Namibia has emerged as one of Africa’s exploration hotspots following major offshore finds by companies including TotalEnergies SE and Shell Plc, with the country aiming to bring its first oil projects online by the end of the decade.
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—With assistance from Archie Hunter and Jack Farchy.
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English (US)