Oil storage almost complete at total cost of N$5.6 billion

18 Apr 2018 15:40pm

The controversial oil storage fuel facility whose tender has drawn controversy is now nearly complete at an overall rate of 95% with the total project cost swallowing N$5.6 billion of state funds.

The facility is funded through the National Energy Fund (NEF) and is envisaged to to fully completed by June of this year, deputy mines and energy minister Kornelia Shilunga has said. 

“Upon completion, this facility is expected to improve the country’s security of fuel supply. Simultaneously, it is also expected to create employment opportunities and contribute siginificantly to government revenue,” she added. 

Ever since the project raised stink over the manner in which is was quoted in US dollars thus exposing the country to currency risks resulting in costs going up, no heads have rolled among those that have been implicated.

This is inspite of interventions by then Attorney General, Sacky Shangala, and strong voices by the opposition to see justice done.

The Villager initially reported that when the project was conceived in 2012, the cost was N$740 million before it moved up to N$900 million and then to N$1, 8 billion. 

Leevi Hungamo was chairing the technical committee chosen by the ministerial committee to award the tender to a company that would quote in Namibia dollars but the committee opted, instead to give the tender to CRB that quoted in US dollars.

 CRB was a joint venture of the China Harbour Engineering Company, the Roads Contractor Company (RCC) and Babyface Civils and the fuel storage’s cost early last year was reportedly N$5, 4 billion.

Speaking to the media last month at a press conference on the cost-escalation issue, new mines and energy minister, Tom Alweendo, is on record saying, “It is talked about as if the costs are based on the original design. The project has doubled in size and in scope. The point to be made is that the cost is not talking about the original project.” 

Meanwhile the fuel storage facility saga continues to be a debated topic in parliament with opposition forces baying for blood.

The mines and energy ministry has in the meantime managed to collect N$1.3 billion in mineral royalties into the state revenue fund during financial year 2017/18, deputy minister Kornelia Shilunga has disclosed. 

These are payments from mines for the privilege of extracting the mineral from the ground based on a lease agreement based on a portion of earnings from production and varies depending on the type of mineral and the market conditions.

On top of this, N$2.3 million was also collected from mineral licenses with total export earnings adding to the coffers another N$23 billion. 

Petroleum exploration and production rental fees alone brought N$28 million to the state, the deputy minister revealed. 

State of mines’ production 

The B2Gold mine has produced 5 436Kgs of gold during the year under review, an increase from 4 845Kgs in the year before.

The minister said copper cathode production at the Tschudi mine remained on target as planned producing 15 466 tonnes in the year under review.

The Okanjange Graphite project situated about 70Km north-west of Otjiwarongo also commenced production.

“It is anticipated that the mine will have a lifespan of about 35 years at a production rate of 20 000 tonnes of graphite per annum. The company employs 139 people on the mine and 108 people on the plant,” Shilunga said. 

The Namibian diamond production for the period under review was just over 1.8 million carats and over 240 000 carats of Namdeb run-off mine were offered locally to Namib Desert Diamonds (Pvty) Ltd (Namdia) and local site holders at a value of US$360 million.

This is more than the US 291 million of 2016/17.

“This achievement has yielded an increase in beneficiation activities and enabled Namdia to fulfill its mandate,” the deputy minister said. 

The conversion of rough diamonds to polished has also shown improvement due to improved monitoring, reporting and stakeholder engagement by the minister in driving the beneficiation agenda, Shilunga said. 

To that effect, 54% of rough diamonds given to local site holders were processed locally.

Said Shilunga, “The ministry hosted the Kimberly Process (KP) Certification Scheme Review Visit in September 2017, which found and confirmed that Namibia has been compliant to the Kimberly Process minimum requirements and thus continue to trade its diamonds which are certified as conflict free.” 

“Despite the challenges experienced in the Uranium market, the Husab mines commenced production and exported its first production shipment during December 2017. The mine is expected to produce to full capacity by the end of 2018,” she said.