Parliament on Tuesday passed, amid reservations from the opposition, the Liquid Fuels and Gas (Production and Supply) Act (Amendment) Bill to facilitate the transition from open tender to government-to-government procurement of fuel.
The new law will make operational President Lazarus Chakwera’s directive to transition from the open tender system to a government-to-government procurement process and gives the Minister of Energy the power to nominate an agent or State entity to import fuel without the oversight prescribed in the Public Procurement and Disposal of Assets (PPDA) Act of 2017.
Following the amendment, Section 5 (6) of the Liquid Fuels and Gas (Production and Supply) Act (Amendment) Bill now reads: “The Public Procurement and Disposal of Public Assets Act shall not apply to the government-to-government fuel supply arrangement.”
But the move did not go down well with Democratic Progressive Party spokesperson on legal issues in Parliament Bright Msaka, a lawyer, who expressed concern that the amendment will put the minister above the law and create opportunities for financial abuse.
He said: “The government is creating a crisis to pass laws that will place them above the law. This will place the minister above the law and create room for public officers to steal.”
Taking her turn, United Democratic Front (UDF) spokesperson in the House Esther Jolobala said switching to a government-to-government would arrangement would not fix Malawi’s fuel supply challenges because the root cause is persistent scarcity of foreign exchange.
She said: “The problem in Malawi is not a lack of legislation. Even if we have additional legislation, how are we going to pay the other governments if we don’t have forex?”
On the amendment to remove the PPDA Authority out of the loop, Jolobala said: “If we take Mera [Malawi Energy RegulatoryAuthority], Nocma [National Oil Company of Malawi] and PPDA out and replace them with the minister, a representative of the President, then we are [effectively] sending this process to State House.”
But Minister of Energy Ibrahim Matola allayed the concerns, saying the bulk-buying system is trying to cut intermediaries and directly interface with oil refineries such as Saudi Arabia, Oman and Bahrain, among others.
“The fuel will be cheap once the middlemen are taken out of the picture,” he said.
Matola further said Petroleum Importers Limited (PIL), aconsortium of private oil marketing companies, will remain in the loop because the law prescribes that 40 percent of the country’s fuel imports should come in through the company.
But Msaka, in an interview after Parliament adjourned, accused the minister of not knowing what he was talking about, saying Section 2 of the amended Act grants him exclusive power to appoint an agent to import fuel.
In a national address last week, the President said his administration would strike government-to-government fuel deals with more flexible payment arrangements to avert perennial fuel stock-outs, which worsened in the past six weeks.
Section 37 of the PPDA Act prescribed open tender as the preferred method, although it provided exceptions to use other methods such as restricted tendering and single sourcing.
A source familiar with government-to-government deals confided in The Nation last week that the arrangement meant importing directly from oil producing companies or refineries, including State-controlled ones, under better terms such as extended credit facility and better prices. The source said the deal will in the meantime be facilitated under the Government of Kenya arrangement by importing directly from Aramco in Saudi Arabia, Abu Dhabi National Oil Company and Emirates National Oil while processing Malawi’s own facility.
