Africa

Oil rights bagged by the elite few

Shinovene Immanuel

There is no 'black gold’ that can be commercially exploited yet in Namibia, but exploration licences is making a few connected middlemen wealthy

Namibia has been called the next big oil frontier, as it has the same offshore geological formations as the coast of Brazil, where the giant Lula field was discovered in 2006.

The perceived oil potential has resulted in a get-rich-quick scenario where licences are acquired by well-placed Namibians for a fee of up to R30 000 and sold on for millions.

Under scrutiny is the absence of regulation, allowing room for secretive deals by local and multinational companies.

AmaBhungane calculations show that a few middlemen and politicians have benefited by hundreds of millions of rands in the past six years from a handful of transactions in exchange for their prospecting licences.

The government decided to issue licences in 2004, purportedly on a first-come, first-served basis. But it appears many of the beneficiaries are politicians, their children or their business partners.

Licences are then mostly sold on.

Mines and Energy Minister Isak Katali admitted in 2011 that Namibia has become an “Eldorado of speculators and other quick-fix, would-be mineral explorers and mining developers”.

Think tank raises concerns
A report released by the Institute for Public Policy Research (IPPR) last year, titled Namibia’s New Frontiers – Transparency and Accountability in Extractive Industry Exploration, raised concern about opaque deals in the exploration sector.

The report said foreign investors are asked to partner with companies that appear to be little more than “briefcase firms” representing favoured individuals.

The IPPR also complained of the lack of laws, rules and guidelines to deal with conflicts of interest.

Its director, Graham Hopwood, said it is a major concern that Namibia’s public officials – politicians and state employees – are not required to declare their assets.

“The failure to tackle these issues in law, systems and practice creates major loopholes that can be exploited by corrupt officials and business people,” he told amaBhungane. He said it’s possible for a company to receive a licence and sell it in a multimillion-dollar deal without the fact ever being publicised.

“We do not know about the companies that senior public officials may have links to because there are no working systems for public asset declaration in Namibia – and information about companies at the registrar of companies often appears to be incomplete, missing or out of date.

“We can’t demand this information because the government is under no compulsion to make it public – Namibia lacks an access to information law.”

Hopwood expressed concern that licences are allocated by a small group of officials under a nonstatutory committee headed by a petroleum commissioner who has massive influence over the decision.

Cheap costs
Licences are cheap, entitling holders to conduct a preliminary survey at a cost of R15 000. To apply for an exploration licence, a payment of R30 000 is required. If oil is found, a 25-year production licence costs a mere R30 000.

Given the global thirst for new oil prospects, Namibians with a stake in a licence are in line for a huge payout when one of the majors moves in.

Petroleum commissioner Immanuel Mulunga said: “We are obliged to process every application that we receive regardless of whether the applicant is, as you put it, well connected or not. I can personally only be happy and proud to be overseeing an industry where Namibians have profited. What’s the point of doing business if you can’t make money from it anyway?”

AmaBhungane has compiled a list of the principal beneficiaries, who all have links with the government or Namibia’s ruling party, the South West Africa People’s Organisation (Swapo).

Knowledge Katti
Businessperson Knowledge Katti is a friend of Hage Geingob, the current prime minister and probably the next president of Namibia. He is also a business partner of struggle veteran Andimba Toivo ya Toivo.

Katti started getting oil licences in 2006 when the Namibian government decided to give preferential treatment to black-owned companies. The minister of mines at the time, Erkki Nghimtina, announced that Katti, in partnership with South African businessperson Mxolisi Mbetse, was awarded an exploration licence for three blocks.

Katti led empowerment partners that owned 30% of the company awarded the rights, Mbetse’s Namibian Industrial Development Group (NIDG).

The same year, Katti brought Namibian Minister of Home Affairs   Pendukeni Iivula-Ithana into his other company, Kunene Energy, which in turn received licences for three offshore blocks.

Katti sold Kunene Energy to the Canadian-listed UNX Energy Corp in 2008. The company described Katti as “well positioned to assemble strategic interests in high-profile African oil and gas projects”.

The deal consisted of cash and shares in UNX. UNX also purchased Katti’s 30% of NIDG for $1.5‑million in cash. In 2011, Brazilian oil company HRT bought UNX for $781‑million in a shares-only deal.

Katti and his partners (including Iivula-Ithana) are believed to have owned about 12% of UNX Energy at the time, giving them a paper windfall of around $90‑million. HRT is now the second-largest Namibian exploration licence holder, with 10 blocks.

Iivula-Ithana has a son, Shafa Kaulinge, whose company, Amis Energy, also holds three exploration licences.

Katti declined to answer questions emailed to him. “Go to the government and ask them … I have little time to entertain childishness or any nonsense,” he told amaBhungane.

Heindrich Ndume
Another well-connected individual who has made a fortune from the sale of licences is Heindrich “Swapo” Ndume, son-in-law of Namibian President Hifikepunye Pohamba.

Ndume is the director of Enigma Oil and Gas, a company that was bought by London-listed Chariot Oil and Gas in 2008 in a deal that valued Enigma at $47‑million.

As with Katti, Ndume’s Enigma was one of the first black-owned oil companies to secure licences.

Chariot now owns close to 13 blocks, mostly acquired with the assistance of Ndume, making it Namibia’s biggest offshore concession owner.

Desmond Amunyela and Lazarus Jacobs
Desmond Amunyela and Lazarus Jacobs co-own Paragon Investment Holdings and are also part of the elite group of Namibians who have benefited from the sale of their licence in the Walvis Bay basin.

Paragon sold its interest to Pancontinental Oil and Gas for $4‑million last year. Paragon’s interest in the block was reduced to 5%.

Amunyela was unapologetic, saying the company had sold its interest to raise money for its other investments and calling the transaction “smart enterprising”.

Paragon is a private equity company with multiple interests –  including a weekly newspaper, the Windhoek Observer. The Observer lobbied for the election of Prime Minister Hage Geingob at the ruling party’s 2012 congress.

Amunyela told amaBhungane that there is nothing wrong with Namibians selling their licences: “The truth is many of us do not have expertise and skill to develop a mine or drill for oil; the partnership with those in the know is good for Namibia to learn from.”

Amunyela said his ties with Geingob date back as far as 1994. He again defended his relationship with the premier in July after admitting that he paid R1‑million for Geingob’s trip to the 2014 football World Cup final in Brazil.

Family and comrades
Other licence holders are relatives and comrades of the politically powerful. One is Helmut Angula, who has served in five Cabinet portfolios since 1990. He is a former deputy minister of energy and head of the country’s National Planning Commission. 

Angula currently serves in the ruling party’s Politburo. He is a director in Canadian exploration company Eco Atlantic and its Namibian subsidiary, Eco Namibia. With nine blocks, Eco Atlantic is the third-largest international company to hold rights over Namibian waters.

Tobie Aupindi, who represents the United States-based Hydrocarb Corporation, is a former member of a Swapo think-tank that advises on party policies.

Former youth minister and current MP Kazenambo Kazenambo confessed in Parliament in June that he owns a lucrative exploration licence, saying he had applied for it purely for reasons of status.

Frans Mushimba, the son of black economic empowerment mogul Aaron Mushimba (the brother-in-law of former president Sam Nujoma), also has a petroleum licence in a joint venture that includes oil giant BP.

Dantagob Gurirab, the son of National Assembly speaker and former prime minister Theo-Ben Gurirab, also had a licence. Dantagob co-owns Alphapetro, which was in partnership with Canadian firm Petro Viking Energy. The licence expired last year and was not renewed.

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.

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