Nocma seeks fuel monopoly

 The National Oil Company of Malawi (Nocma) says it wants to have 90 percent stake in all fuel imports into the country instead of the

 current 50 percent.

Nocma is complemented by Petroleum Importers Limited (PIL), a consortium of private sector petroleum trading companies.

Speaking during a media engagement in Lilongwe on Friday, Nocma deputy chief executive officer Hellen Buluma argued that fuel is a strategic commodity with serious implications to the economy to be left under the control of the private sector.

She said in most countries, the government has total control over fuel imports in the interest of both the economy and national security.

Buluma said: “I think

in Malawi we have not appreciated how other countries survive in terms of importation of fuel. It is only in Malawi where we left importation of fuel in the hands of the private sector.

“Fuel is a strategic commodity which affects both the economy and national security. This is why we want to control how our product comes into the country and on this basis, the Parliamentary Committee on Natural Resources has allowed us to have a 90 percent share of imports.”

She said this was the practice in other countries such as Tanzania and Mozambique where the national company does bulk procurement and everyone else acquires the commodity from it.

According to Buluma, the previous transporters taught them a lesson on why it is important to have total control over the

 fuel business including transportation.

She argued that the strike nearly paralysed the economy and compromised national security; hence, they had to engage the Malawi Defence Force (MDF) to transport fuel during the strike.

During its formative years between 2011 and 2013, Nocma had 10 percent stake in the imports of fuel with 90 percent being procured by the private sector.

However, as of 2020, the State oil firm commands a 50 percent share and is moving towards 65 percent control.

Currently, Nocma spends about $25 million every month to import fuel through an agreed credit line with international institutions.

According to Buluma, Nocma wants to move away from credit to purchase fuel and intends to go into downstream business.

The move, she said, will see it venturing into operating fuel filling stations and transportation.

Buluma said: “Soon Nocma will have filling stations. That is also another way to tap on other margins and use that money for the procurement of fuel. That is one of the ways under discussion.”

However, economist Milward Tobias yesterday said Nocma’s move will stifle the private sector.

He said private sector players remain a major player in downstream business.

Tobias said good economics requires that a country should move towards a private-sector led economy where the government concentrates on policy and regulation.

The economist also has some misgivings on Nocma’s business viability, given the history of government failure to run businesses.

Tobias said: “We also know the challenges of corruption in government owned enterprises and allowing such a high level of dominance by Nocma is detrimental to the economy.

“In my view, the appropriate modality would be where the private sector is the main player and Nocma as government only plays the role of strategic reserve in case the private sector fails to supply.

PIL general manager Martin Msimuko yesterday said he could not comment since the issue being raised is coming from a market player not a policymaker