Buluma risks imprisonment, fine

National Oil Company of Malawi (Nocma) acting chief executive officer (CEO) Hellen Buluma risks being fined or committed to prison for alleged contempt of court.

In an application filed by Fuel Tankers Operators Association through one of its members Smart Kalua, it says that Buluma, who is the second respondent in the matter, defied the High Court’s decision restraining Nocma from using delivered duty unpaid (DDU) international commercial term (incoterm).

Fuel tankers operators noted that Nocma, which is the first respondent in the matter, used delivery at place unloaded (DPU) incoterm in importing fuel, which is similar to DDU.

In global commerce, DDU method of importing refers to a system in which the seller or supplier assumes all the risks for delivery of the product from external depots at the ports to various internal depots in the country.

In this case, the local importer only takes charge of the products after it is delivered on site at local depots in the country.

On the other hand, DPU incoterm means the goods must be delivered at a named destination. The seller is in control of the goods up to that named place and the buyer takes charge.

The association argues that the injunction was granted in the context where Nocma was using DDU incoterm whose legality is being challenged for not being provided for in the Regulations under the Liquid Fuels and Gas (Production and Supply) Act.

Reads the witness statement in part: “The duties of the buyer and those of the seller under the DDU incoterm and the DPU incoterm are very similar. As such, it is clear that the first respondent is deliberately disobeying the order of injunction by using the DPU incoterm.

“It is clear that the second respondent is fully aware about the terms of the injunction and she knows exactly what she is doing by using the DPU incoterm and not the Ex-Tank incoterm which is provided for in the regulations.”

The High Court has since set March 2 2022 to hear FTOA’s application on whether to fine or commit Buluma to prison for contempt of court.

On April 26 2021, High Court Judge Charlotte Malonda granted the association an injunction restraining Nocma from using DDU method of importing fuel into the country.

Through its lawyer Shepher Mumba, the association filed an application against the DDU method, describing it as illegal.

The fuel tankers operators argued that the use of DDU method contravenes the regulations as suppliers of fuel are used to transporting fuel from ports and deliver into Malawi.

As such, they argued that this contravenes other public interests, including charging of costs in United States dollars, which drains the country’s foreign exchange reserves.

They also said the DDU is susceptible to abuse due to lack of transparency.

The protracted wrangle between Nocma and the fuel importers came months after transporters also protested a November 2020 resolution by the Parliamentary Committee on Natural Resources and Climate Change to give Nocma a lion’s share of 90 percent and Petroleum Importers Limited (PIL) a paltry 10 percent instead in fuel importation deals.

On January 15, Malawi Energy Regulatory Authority former acting CEO, Ishmael Chioko wrote Nocma CEO stating that the Mera board, which met on January 7 2021 and January 14 2021, had resolved that all the [fuel] volumes for Nocma should be procured under ex-tank system, given the optimal landed costs and lower finance costs.