Mera takes out fuel brokers fee

Malawi Energy Regulatory Authority (Mera) has resolved to stop paying transport brokerage fee to fuel importers with effect from January 1 2023 in a move some industry players say will spare consumers the burden.

In a letter dated November 2 2022 addressed to fuel importers and signed by Mera chief executive officer Henry Kachaje, the regulator said the decision followed a review of the supply chain and the introduction of other cost-effective operational arrangements.

Reads the letter in part: “All importers are, therefore, advised to employ in-house arrangements or other methods deemed efficient without passing on the costs to the pump on imports transport arrangements.

“Effective 1st January 2023, therefore, transport brokerage commission shall no longer be a recoverable cost under handling charges in the price build up of petroleum products.”

Industry sources confided in The Nation yesterday that consumers were paying about K5 per litre hidden in the petroleum price build-up and charged as a percentage of freight, losses, insurance and handling.

International Haulage Brokers (IHB) chairperson Aslam Gaffar, whose institution claimed the fee, said in an interview yesterday they have no problem with Mera’s decision.

“Mera is a regulator and if they say so, it’s alright with us,” he said.

Reacting to the decision, National Oil Company of Malawi (Nocma) spokesperson Rex Chikoko said in a written response the State-owned fuel importer welcomed Mera’s decision to abolish the brokerage fees.

He said the cost was only applicable to importers using ex-tank system and was not part of the fuel price build-up, but, it was being pushed to the consumer.

“Nocma is not applying the importing system that requires the payment of a transport brokerage fee as all costs are to the supplier,” said Chikoko.

Ex-tank means delivery of a product by the seller to the buyer in bulk from the storage tank designated by the seller.

Petroleum Importers Limited (PIL) general manager Martin Msimuko declined to comment on the matter, saying Mera’s decision will not affect the consortium of private sector oil marketing companies.

Efforts to get more clarity from Mera proved futile as Kachaje did not pick up his phone on several attempts while Mera consumer affairs and public relations manager Fitina Khonje asked for more time.

The brokerage fee is not approved as part of the price build-up which is stipulated under Section 46 of the Liquid fuels and Gas Act 2004.

In April 2021, the Fuel Tankers Operators Association obtained a court order that stopped Nocma from using the Delivered Duty Unpaid (DDU) method which they argued was illegal and a contravention of regulations.

The association had for four years fought to have the DDU system abolished and use the ex-tank system which they argue is good for local fuel hauliers.

On the other hand, Parliamentary Committee on Natural Resources and Climate Change proposed that government should have 90 percent control of fuel imports as opposed to its 55 percent. PIL, a consortium of private sector oil marketing companies, will then be left with 10 percent share from its 45 percent.