Namibia: Despite Numerous Proposals, No Approval Yet for Local Oil Refinery

13 August 2019

Windhoek — The Ministry of Mines and Energy has confirmed that although it has received several proposals for the establishment on an oil refinery, it has not yet granted any approval as it awaits feedback on crucial documentation such as feasibility and environmental studies. It is believed that a local oil refinery would provide much-needed relief from rising fuel prices; however this relief could be quite minimal.

"The Ministry of Mines and Energy has been approached by many companies that expressed their intentions to invest in oil refining business ventures in Namibia and have submitted their proposals to the ministry," confirmed executive director in the Ministry of Mines and Energy, Simeon Negumbo.

"No approval has been granted yet to any particular company to proceed with the construction of an oil refinery. Reason being, before the ministry can provide its approval for the project to go ahead, companies themselves have an obligation to conduct feasibility studies and establish if venturing in oil refining in Namibia is a feasible business to undertake. None of the intended investors have yet submitted such a feasibility study to the ministry," said Negumbo.

The executive director further explained that having a local refinery would allow the country to not completely rely on imports of petroleum products, thereby providing Namibia with some security of petroleum products supply.

"However, a local refinery alone will not shield us from geopolitical upsets as the country is not yet a crude oil producer. The impact to the oil prices is that a local refinery, if run efficiently, could offer price relief to consumers attributed to the benefits of increased production volumes, however it might not be that significant," Negumbo added.

The handful of companies that have expressed interest in constructing a local oil refinery have estimated the initial capital injection from around N$4 billion (for the first phase) up to an astronomical N$120 billion, which could produce anywhere between 25 000 barrels of refined oil per day up to 100 000 barrels per day. However, Negumbo emphasised that the investment value differs depending on the specifications and technology used in the refining process.

Local media recently reported that Clasox Petroleum, a Namibian registered company, has applied for 10 hectares of land just outside Walvis Bay for the construction of an oil refinery. Additionally, after the recent Economic Growth Summit in Windhoek, Comsar, which is owned by Russian billionaire, Rashid Sardarov, expressed interest in establishing a N$21 billion oil refinery in the country.

According to 2018 import statistics, Namibia spent more than N$11.4 billion on the import of oil, gas and refined fuel products.

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