Naloba demands ‘ngungula’ restitution from Govt

TILENI MONUGHDI
June 15, 2024

THE Northern Fuel Dealers and the Namibia Local Business Association (Naloba) are threatening to drag the Ministry of Mines and Energy to court in a bid to have their members compensated for losses incurred as a result of crossborder fuel smuggling, known as ngungula.  

The northern businesspeople are also accusing the government of failing in its duty to protect them and the country.

The two bodies are representing service station owners in the Omusati, Ohangwena, Oshana, Oshikoto, Kavango West and Kavango East regions. 

They started the process by way of a legal letter of demand addressed to mines minister Tom Alweendo, demanding that the government compensate at least 26 service station owners with a combined amount of over N$233 million. 

However, according to Naloba spokesperson Peter Kanu Amadhila, the list of service stations is growing, and so will the financial compensation demand. 

The 26 service stations are the hardest hit by rampant illegal cross-border fuel smuggling from neighbouring Angola into Namibia. The affected service stations are primarily situated along the Namibia-Angola border, stretching from Ruacana to Nkurenkuru.

They are demanding immediate compensation for revenue lost from 2016 to 2023, which for the 26 service stations amounts to N$233 million. They also want to be paid a monthly fixed margin compensation of 82% per litre to be paid exclusively to dealers within the affected geographical area until the illegal smuggling is permanently stopped. 

This margin was determined based on the average loss of 45% in fuel gross profits, which amounts to 82 cents per litre.
They are also demanding the immediate implementation of effective border security measures to prevent fuel smuggling.

The two bodies also pointed out that they did not just make losses from fuel sales alone. But the service stations also experience a decline in revenue from convenience shop trading, adding that there is a correlation between fuel sales and convenient shop sales. Meaning the business owners have lost more than the amount being demanded in compensation.

This illicit trade in fuel from Angola is now referred to as ‘ngungula or nugungula service station’. 

The two organisations laid the blame squarely at the government’s door and accused it of failing to arrest the rampant illicit fuel trade along the border since 2016. 

They told us there is nothing that they can do,” said Amadhila, expressing his frustration. Business people are now drowning in debt because they borrowed money from financial institutions to build the service stations, and now they are not performing because of the rampant smuggling.   

 

“Every house in the north is now a service station,” Amadhila said, adding that smuggled fuel from Angola is now readily available and sold from homes. He said northern businesspeople are now demanding that the government allow them to also source fuel from Angola if there is nothing it can do. He said the government is refusing because it too is losing money due to the smuggling from its levies.

 

Amadhila added that their desperation got them to plead with the government to deploy the army along the border. That request fell on deaf ears. “The minister will just tell you there is nothing they can do, but during Covid, they deployed the army along the border,” he said.  

Tom Alweendo: Minister of Mines and Energy

Namibians along the border have benefitted from the easy access to cheap fuel when Namibia’s fuel price increased sharply, from around N$13 per litre in 2018 to over N$22 in 2024. Even talk that Angolan fuel is cheaper because it’s dirty and has a higher sulphur concentration, did not deter Namibians from smuggling with Angolan fuel, said to be damaging cars in the long run. 

The pump prices for Ongwediva for instance, stand at N$22.76 a litre for diesel and N$23.59 a litre for petrol. 

In contrast, fuel prices in Angola are super low compared to what consumers pay in Namibia. In that country, diesel retails for 200 kwanzas per litre, which translates to about N$4.31 and 

petrol goes for 300 kwanzas per litre, which translates to about N$6.40. 

The prices also explain why Angolan towns along the Namibian border, like Santa Clara and Ondjiva have been brimming with a daily influx of Namibian vehicles in recent years. 

It is believed that motorists now make the daily trip to Angola to take advantage of the cheaper fuel. 

The reason for the vast difference in fuel prices between the neighbours is because Angola, a crude oil producer and a net exporter, found a way to allocate a portion of the crude for local consumption at subsidised rates. 

Namibia, on the other hand, uses a different formula, which also imposes taxes on behalf of the State, further burdening the consumer. The energy ministry determines the fuel pump price based on what is called a basic fuel price, based on the cost of bulk fuel landed at the Walvis Bay port, topped up by a host of taxes and levies for the government and its various agencies. 

For every litre of fuel bought, the Namibian consumer pays N$4.59 to the government. This figure consists of a Customs and Excise duty – 4c per litre, the National Energy Fund levy takes N$1.89 per litre, Road User Charge (Road Fund Administration) – N$1.98 per litre. Fuel Tax – 4c, the Motor Vehicle Accident fund (MVA) levy – 47.7c and the National Road Safety Council Levy – 17.6c per litre. 

Fed up with the state of affairs, the businesspeople have now opted to take matters to the courts to force the government’s hand. 

“I can confirm Naloba’s legal challenge, and the matter is being dealt with by our legal representatives, the government attorneys,” said mines minister Tom Alweendo, who did not provide further comment. 

The Issue has seen the letter dated 3 June, from Elia Shikongo of Shikongo Law Chambers addressed to Alweendo. 

Shikongo is acting on behalf of the two bodies. The letter states that the illegal smuggling of fuel resulted in adverse trading conditions and substantial losses to businesses trading in fuel in the  northern regions.
“Our client operates in geographical trading areas that stretch from Ruacana to Nkurenkuru, and its service stations, especially those near the border, have been severely affected by the illegal smuggling activities,” read Shikongo’s letter, adding that the illegal smuggling has reduced sales volumes, resulting in the businesses’ inability to meet financial obligations and maintain profitability.

The letter points out that the government has a constitutional responsibility towards citizens and residents. Government also has the duty to protect the country’s territorial integrity and to ensure the borders are secured to prevent any illegal cross-border activities.  

The northern business people point out that it held meetings with the mines ministry and law enforcement agencies, dating back as far as 2021, to address the illegal cross-border activities. 

However, their plea to the authorities fell on deaf ears as the ngungula problem continued to persist. This, according to the two bodies, means that the country’s law enforcement agencies have failed in their duty to protect the country and its citizens from these cross-border crime syndicates.
Shikongo insists that the unresolved situation amounts to a violation of his client’s fundamental and constitutional rights. He said the country’s constitution empowers citizens to approach the courts to enforce or protect their rights and freedoms when their rights have been infringed upon. 

The lawyer pointed out that the government failed to protect his clients’ fundamental human right to carry on a business, which “amounts to an infringement of a fundamental human right”.
“We hold further instructions that the repeated uncontrolled instance of crossborder fuel smuggling is facilitated by apparent systematic failures in border control and law enforcement, which constitutes a dereliction of constitutional duty on the part of the Namibian Government,” read Shikongo’s letter.

Some Interesting Stories