the Malawi Energy Regulatory Authority (Mera) on Thursday warned oil marketing companies (OMCs) against contravening the newly gazetted Franchising and Dealership By-Laws of May 2015.
Among others, Mera says the by-laws only allow fuel companies to operate just two retail outlets and franchise the rest to Malawians.
Mera has also said the new laws, if flouted, empower the energy regulator to imprison the chief executive officer of the contravening fuel company for a period of three months.
Mera senior legal officer, Mphatso Kachule, said in his presentation during a Franchising and Dealership By-Laws Workshop in Lilongwe on Tuesday that the whole idea is to foster competition and economically empower Malawians.
“We have given OMCs a transition period of six months and come November, our expectation is that fuel companies will have to conform to the stipulations of the by-laws,” said Kachule.
He bemoaned that in the absence of the by-laws, the playing field in the oil marketing business value chain was not levelled, as fuel companies operated with high degree of freedom and that the market was monopolistic in nature.
Kachule said, in the past, OMCs had on paper clear dealership agreements but to the contrary on the ground it was a different thing all together.
According to Kachule, every holder of a wholesale licence is required to advertise in an open manner and invite the general public to apply for fuel retail business.
Said Kachule: “We have had cases in the past where fuel companies were running retail outlets on a partnership basis, landlord and tenant arrangement, employee and employer basis and in certain circumstance oil market companies could have a subsidiary that could run a retail outlet, this is not allowed and is unlawful,” he said.
Speaking separately, Mera acting chief executive officer Elias Hausi said it is clear on the ground that there is no uniformity on dealership arrangement, as each fuel company has different arrangement with the other; hence, creating confusion on the market.
That, according to Hausi, posed a challenge to the regulator as there has been no basis of evaluating fuel retail dealerships.
Reacting to the new by-laws, Petroleum Retailers Association (PRA) chairperson Victor Lulker said they welcome the new guidelines which he said will help level the playing field in fuel retail business.