MPs want govt to control fuel

 Parliamentary Committee on Natural Resources and Climate Change has proposed sweeping changes to pave the way for government to have

 90 percent control of fuel imports.

If implemented, the move will see the import quota on fuel for State-owned National Oil Company of Malawi (Nocma) rise to 90 percent from 55 percent. Petroleum Importers Limited (PIL), a consortium of private sector oil marketing companies, will be left with a paltry 10 percent share from its present 45 percent.

During a meeting with officials from Ministry of Energy, Nocma, PIL and other stakeholders in the petroleum industry at Parliament Building in Lilongwe yesterday, committee chairperson Welani Chilenga said government should control the commodity.

He said: “Fuel is a strategic commodity and, therefore, it should indeed be managed at all cost by government. It should not be left in the hands of private operators.

“We stand by the recommendation that Nocma should import 90 percent and private operators 10 percent.

“We hope that you [Ministry of Energy] are going to do those modalities and wherever it requires changing of laws, necessary steps should be taken.”

Chilenga asked the ministry to speed up a bill to facilitate the arrangement to have Nocma handle 90 percent of fuel. He said the bill should be tabled in Parliament by next year.

He warned against delays on the matter and said his committee will bring the bill to Parliament if the ministry takes time on the issue.

The committee also called on fuel importers to accommodate small-scale transporters on fuel contracts. “The small-scale transporters should be allowed to form associations and get business,” said Chilenga.

But PIL general manager Martin Msimuko said the private sector will be negatively affected if the current import quotas are changed as proposed by the committee.

“If they push for 10 percent, they will be closing PIL which is a private sector contribution and I believe that would not be in the interest of our government to stifle the private sector in the country,” he said.

Msimuko said, PIL has over the years delivered and operated alongside Nocma to ensure that Malawi has fuel.

He also said relying on one importer is not healthy for the security of supply of fuel into the country, saying there is need for more importers to spread the risk and minimise inconveniences.

Msimuko said: “We have done this business since 2000 to date and we think we have made a good contribution to Malawi. For 17 years, we were alone until Nocma came into place and we believe the arrangement we have now is the best for the country because it ensures security of supply.

“Where Nocma can have issues, PIL can supply and where PIL can have issues, Nocma can supply and, as we are talking now, we have contracts. We manage contracts and we are supplying the country.”

On the committee’s appeal to give small-scale transporters business, he said PIL is committed to engaging Malawians on the same. However, he said the challenge is that small-scale transporters want to participate as an association not as individuals.

“During recent contracts, only seven applications out of over 100 applications came from Malawians and most of them were the big transporters,” Msimuko said.

PIL was formed in 1999 following a recommendation of the Malawi Government, the International Monetary Fund and the World Bank to ensure security of supply after the collapse of the then State-owned Petroleum Control Commission.

Nocma, on the other hand, was formed in 2010 under the Companies Act of 1984 with a mandate to manage a strategic fuel reserve facility, provide hospitality to new entrants at a fee as a way of promoting competition and upstream oil and gas exploration.

During yesterday ’s meeting, Ministry of Energy deputy director responsible for rural electrification Patrick Silungwe, who represented the principal secretary, said the ministry will look into the committee’s recommendations.

In an interview later, he said the ministry supported the proposal to have government handle a larger quota of the fuel imports as long as the move does not choke the private sector.

On whether the law prescribes quotas, Silungwe said: “The law does not state how much Nocma or the private sector should import, but it provides for private sector participation.”

He said a number of things also need to be looked into, including increasing Nocma’s fuel holding capacity before the quotas could be implemented.

Nocma deputy chief executive officer Helen Buluma supported the committee’s proposal, . saying they are already in the process of expanding the capacity of fuel reserves

She said in other countries, it is government institutions that import fuel and the private sector buys from those government institutions.

Buluma said Nocma wants to empower even small-scale transporters although there is resistance from their association.

She said Nocma has already shown commitment that 86 percent of the fuel should be transported by Malawians and that any Malawian transporter willing to participate in the contracts should take part.

Buluma also pointed out that some women who formed an association have been brought on board to be part of the 86. 7 percent share in Nocma fuel transportation.

The battle over fuel import quotas between PIL and Nocma dates back to 2013 when PIL accepted to take up to 10 percent of national volumes from Nocma on condition that Nocma imported and sold the fuel to PIL for resale. PIL was to get a 25 percent commission on the import margin Nocma was to earn.

In 2015, the Ministry of Energy announced its decision to make Nocma a sole importer of fuel.

But in 2017, PIL and Nocma agreed on a 50-50 arrangement which Chilenga, who also chaired the same committee, faulted Malawi Energy Regulatory Authority (Mera), saying it allowed government to dictate matters on the importation of fuel.

Until 2017 when PIL and Nocma agreed a 50:50 import quota for fuel, PIL was importing in 70 percent of the country’s fuel into Malawi