MINES and energy minister Tom Alweendo has encouraged investors to continue exploring the country's offshore areas for oil and gas as a way to capitalise on the favourable petroleum tax regime being offered.
He said this during his opening remarks on Wednesday at the Namibia International Oil and Gas conference, which is underway at Swakopmund.
The minister explained that oil and gas exploration can generate revenue for the government, and defy influences from world economic powerhouses.
"Many countries in the world, including Namibia, are dependent on oil imports, and nations with a surplus often exercise disproportionate influence on the world," he said.
He noted that a major oil discovery will be important for Namibia in these times of a volatile and challenging business environment as a result of the slowdown in the economy.
"Oil and gas are the world's most important and valuable commodities, and constitute a major source of revenue for governments and corporations which control production and distribution," the minister stated.
Alweendo pointed out that the discovery of oil and gas, and its success, will still depend on collective efforts from both the government and the private sector.
The government will thus appreciate value-addition investments in the upstream or downstream cycle.
"As of recent, about 18 exploration wells have been drilled in offshore Namibia, with no major discovery, but yielded an excellent geological understanding of the Namibian offshore margin", he said, and despite having no major discovery, Alweendo encouraged further investment in that space, while the government provides a conducive environment by ensuring a stable policy framework.
As an appetiser for investors, the government's petroleum income tax is levied at 35%, state royalty at 5%, and a negotiable additional profit tax when the internal rate of return is greater than 15%. The country's petroleum tax regime and incentives are some of the most favourable in Africa, the minister observed, encouraging the equitable sharing of economic benefits for the investor and the country.
He said in addition to the petroleum tax regime, the country has an approachable government for further consultations on how the state can enable business operations.
Currently, the private sector controls 100% of the imported refined products, but the reinstatement of the 50% fuel import mandate through state-owned oil and gas company Namcor remains a strategic objective of the government.
This will be championed by the N$5 billion strategic oil storage facilities at Walvis Bay, which are almost completed.
Namcor applied to the Namibian Competition Commission earlier this year to be exempt from direct or indirect competition in selling and purchasing fuel products.
According to the Namibian import statistics for 2018, the country spent more than N$11,4 billion on the imports of oil, gas and their refined products.