16 February 2018

Namibia: Kandjoze Warns Schlettwein ... Ministers Clash Over N$5,6 Billion Storage Facility

Former energy minister Obeth Kandjoze warned finance minister Calle Schlettwein about hand-picking a Netherlands-based company to use the N$5,6 billion state-owned fuel storage facility at Walvis Bay.

The company, Vitol SA, which owns Shell Namibia, is a global oil trading entity.

The government has been constructing an oil storage facility since 2013 for N$3,7 billion, but the price controversially ballooned to N$5,6 billion.

Now, the government wants to hand over that new facility, which will store petroleum products such as petrol, diesel, paraffin and others, to a private company.

The Namibian has seen documents which show that there was a stand-off between Kandjoze and Schlettwein on whether the storage facility should be rented out to a private firm.

According to the documents, Vitol Group, through its Switzerland subsidiary Vitol SA, wants to rent the fuel storage facility for 10 years.

Vitol SA made their proposal through Schlettwein, who then took that proposal to Cabinet two weeks ago. Kandjoze was not impressed about that.

Kandjoze rubbished the proposal by Vitol SA in a letter dated 5 February 2018 - three days before he was demoted by President Hage Geingob to be the economic planning minister.

"Saddling the public with the cost of the project and privatising the profits should be avoided. The proposal appears to push such an agenda in the introduction, to which I do not subscribe," he stated.

His concern was mostly that the government is partly privatising a facility which was constructed with N$5,6 billion of taxpayers' money.

"Please allow me to reiterate my concerns concerning the need for all interested parties to be treated equally, and the process to be conducted in an accountable and transparent manner," Kandjoze added.

The former mines minister said Vitol SA is not the only interested company, nor are they the only company capable of being used at the storage facility.

"A competitive process will undoubtedly prove more favourable in ensuring the maximum possible benefits to the government," Kandjoze reasoned.

Ironically, it was Kandjoze who appointed - without public bidding - a diamond company owned by businessman John Walenga and a nephew of former Cabinet minister Helmut Angula to value diamonds from the state-owned Namib Desert Diamonds (Namdia) for five years.

Kandjoze said in his letter to the finance minister that the commercial fees proposed by Vitol SA fall short of what can be expected from the facility, which would cost over N$5,6 billion of taxpayers' money.

He said the finance ministry or the Cabinet committee on treasury headed by Schlettwein was not the correct body to deal with Vitol SA's proposal since it was supposed to go to the energy ministry.

According to him, the move to lease the storage facility defeats the aim of building it in the first place, which was "to ensure strategic fuel reserves, owned and held by the government".

"The facility was to be operated by Namcor and Namport to give effect to this strategic interest, and by implication, this strategic national interest should be controlled by the state," Kandjoze said.

He added that Vitol SA's proposal appears to be opposite to that plan, and that the military and national intelligence should be consulted on this matter.

"A full takeover, transfer and possession of the facilities by Vito should be approached with the utmost caution," Kandjoze said.

He also warned that giving Shell Namibia the storage facilities could be deemed as unfair competition to other petroleum companies.

Kandjoze, however, hinted at accepting the push to hand-pick the owners of Shell. He asked Schlettwein to inform Vitol SA to provide the energy ministry with technical details so that they can discuss them further.

"Should the Vitol SA proposal and the final modalities around such proposal be in government's best interest, I would be willing to consider applying to you for an exemption regarding the Public Procurement Act," Kandjoze said.

He said Schlettwein indicated that he is willing to grant an exemption in the national interest.

Kandjoze confirmed writing the letter in his capacity as the energy minister.

He declined to comment on the exact details of his letter, but referred The Namibian to the new energy minister, Tom Alweendo.

Alweendo told The Namibian yesterday that the selection process of who will use the storage facility will be transparent as it will be put out on public tender.

"I found many proposals here. The process will still be followed, where we discuss the proposals and choose the best one," he said.

Schlettwein was unavailable for comment yesterday, but denied any wrongdoing in the Vitol SA proposal when he spoke to The Namibian on Saturday.

He said he only took the proposal to Cabinet as a procedure, and not to favour Vitol.

CAMPS

The clash between Kandjoze and Schlettwein on how to use the oil storage facility underlines an ongoing hostility between two powerful camps in government.

It's unclear who the key power players are, but hints could be found on who is supporting who in media reports regarding Namcor in recent months.

Kandjoze's camp includes him and some Namcor board members, who wanted to get rid of Namcor's managing director, Immanuel Mulunga, last year.

Sources said the Vitol SA proposal is linked to a story The Namibian published last week, which said Schlettwein rejected a request by Namcor board chairperson Patrick Kauta to allow the parastatal's acting managing director to award tenders while substantive chief executive Mulunga was on forced leave.

The Namibian understands that Schlettwein blocked Namcor's request to approve tenders in the absence of Mulunga because he was tipped off that Namcor, in partnership with the energy ministry and some Namibian business personalities, were set to clinch a deal in New Zealand to lease the storage facility to another private company.

Some senior government officials suspect that the Namcor board dispatched Mulunga on early leave so that they could push through the deal in New Zealand.

It's not only the New Zealand meeting that raised red flags for Schlettwein's team. There is another N$4 billion oil supply contract that will involve a private company to fill Namcor's oil storage facilities, and also import 50% of Namibia's petroleum products.

Schlettwein blocked Namcor from the signing of any tenders in December last year.

He appears to back public enterprises minister Leon Jooste, who warned the Namcor board not to remove Mulunga.

The Vitol SA deal has roots in a USA trip by President Hage Geingob in 2016. News agency Nampa reported last year that Namcor, represented by Mulunga, signed an agreement with Vitol Group to "set up of a commercial storage facility at Walvis Bay.

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