TotalEnergies in, Vitol out

Namibia’s bulk fuel procurement system has taken another significant turn, with TotalEnergies emerging as the successful bidder to supply the country with petrol and diesel the next three months.

The agreement will run from November 2026 to January 2027 at prices below the Basic Fuel Price (BFP). This development, announced late yesterday by minister of Industries, Mines and Energy Modestus Amutse, signals a sharp shift from the fuel-import regime that prevailed earlier this year, when international supply disruptions and hefty supplier premiums placed severe pressure and inconsistency on the National Energy Fund (NEF).

Amutse announced that the TotalEnergies bidding group, with the trading arm of TOTSA, was the successful bidder in the latest open competitive tender. The contract awarded to TOTSA covers approximately 345.3 million litres, comprising 246.9 million litres of diesel and 98.4 million litres of petrol.

More significantly for Namibian motorists, TotalEnergies offered a discount of 61 cents per litre on diesel and 71 cents on petrol against the BFP. Across the combined volumes, the weighted average discount is approximately 63.85 cents per litre, translating into an estimated N$220.5 million saving over the contract period.

“This round, we have gone a step further,” Amutse said when announcing the new fuel supply arrangement. “All four companies that submitted bids offered to supply at a discount to the BFP. Not a single bidder asked for a premium,” the minister added.

**Premiums to discounts **

For years, bulk fuel suppliers charged Namibia premiums on top of the BFP, increasing the cost of maintaining adequate fuel stocks. That pressure intensified in April and May this year when international oil-market volatility drove up import costs. Government records show that extraordinary supplier premiums during that period ranged from about N$0.50 to N$2 per litre, with the direct financial impact estimated at approximately N$300 million for April and May alone.

The NEF therefore had to absorb substantial under-recoveries. The ministry said the government was expected to cover about N$1.3 billion in April and May to protect motorists from the full impact of global fuel-price shocks. It then moved to place Namibia’s bulk fuel requirements with a single supplier. As such, international fuel supplier Vitol was selected for the July-to-September period after offering to supply Namibia’s fuel at the BFP without a premium. That arrangement was presented by the government as an emergency intervention intended to secure Namibia’s entire fuel requirement during a period of extreme international market volatility caused by conflicts between the US and Iran, Russia and Ukraine, as well as escalating hostility throughout the Middle East.

The government subsequently extended Vitol’s arrangement for October, describing it as a one-off final extension that would not continue beyond that month. The difference between the Vitol and TotalEnergies arrangements is therefore not merely the identity of the supplier because under the Vitol arrangement Namibia moved from paying above BFP to paying at BFP. Under the new TotalEnergies contract, the government stated it has moved further to buying below BFP.

Competition delivers

Amutse added the latest procurement process involved four bidders, with submissions assessed according to qualification, price, supply-security risk, and the standing and track record of each supplier. Unlike the emergency Vitol arrangement, which generated criticism over the concentration of Namibia’s bulk fuel imports in one company, Amutse noted that the new contract followed an explicitly competitive bidding process.

While the Vitol decision in May attracted scrutiny because the company was given exclusive rights to supply bulk petrol and diesel for three months. Critics questioned the transparency of the emergency procurement process and the implications of concentrating supply in one trader. At the time, the government defended the decision on the grounds that Vitol could meet Namibia’s requirements at BFP without additional premiums or public money.

The new tender potentially changed that debate because the ministry says all four bidders offered prices below BFP. This suggests that the premiums experienced during the peak of the international supply crisis have substantially eased, while competition for Namibia’s consolidated fuel requirement is now producing a financial benefit for the state and consumers.

The N$220.5 million saving, however, should not be interpreted as an automatic 61-cent or 71-cent reduction in pump prices. That is because the BFP is only one component of Namibia’s regulated fuel-price structure. Pump prices also incorporate levies, margins, transport and other components, while the tender discount affects the cost at which bulk fuel is procured and ultimately feeds into the fuel-price account.

The ministry said the estimated N$220.5 million savings will accrue to the national fuel-price account, or slate, managed through the NEF, strengthening government’s ability to stabilise domestic fuel prices. This is significant for the domestic economy that is still recovering from the fuel-price shock experienced earlier this year.

For Namibian motorists and businesses, the immediate question is how much of the savings will translate into greater stability at pump prices. For the government, the bigger test is whether competitive procurement can be maintained without compromising security and quality of supply, as the country still remains entirely dependent on imported refined petroleum products.

– ebrandt@nepc.com.na

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