Namibia’s state-owned oil company, the National Petroleum Corporation (NAMCOR), Thursday unveiled a three-part Turnaround Strategy to address the company’s working capital deficit.
Acknowledging past challenges, particularly the turmoil experienced in 2010 due to fluctuating oil prices and a flawed agreement with a third-party supplier resulting in significant financial losses, NAMCOR acting managing director, Shiwana Ndeunyema revealed to media that the entity made an unprecedented net loss of 700 million Namibia dollars (about 47 million U.S. dollars) as of March 31, 2023.
According to Ndeunyema, this period was marked by a critical working capital deficit, exacerbating cash flow challenges. After conducting a thorough diagnostic exercise in May 2023, NAMCOR identified 10 root causes for these issues, primarily linked to market volatility, breaches in internal controls, and governance systems.
Ndeunyema said that the first phase of the strategy focuses on short-term survival and stabilization, along with decisive shareholder capital intervention. Secondly, medium-term strategies center on implementing a new operating model to reduce exposure and ensure sustained success.
“The third phase relies on the development of a 15-year strategic masterplan that seeks to position the company for long-term sustainability, with efforts towards unlocking the opportunities presented by the recent oil discoveries and embracing the energy transition,” he added.
Addressing public concerns about possible liquidation, Ndeunyema reassured stakeholders that the first phase of the strategy successfully averted this outcome through a strategic deal structuring with a key supplier.
Phases two and three seek to establish long-term sustainability and unlock the value in the oil and gas value chain, he explained.
Ndeunyema concluded by reaffirming NAMCOR’s position as a leader in the petroleum industry, aiming to become one of sub-Saharan Africa’s largest entities, while calling on collective support from staff, management, the board, and shareholders to realize the potential of recent oil discoveries and embrace the energy transition.