Tussle over fuel levies

Two weeks after the controversial increase in fuel prices, it has emerged that parastatal National OilCompany of Malawi (Nocma) has not been remitting around K17 billion in leviesto Mera, including the Price Stabilisation Fund (PSF) that cushions fuel prices.

But Nocma claims the Malawi Energy Regulatory Authority (Mera) also owes it K13.8 billion in import losses, setting up a parastatal civil war whose loser can only be the proverbial grass, in this case, the consumer.

Recently, Mera announced the increase of pump prices for petrol and diesel from K932.50 and 935.60 to K990.30 and K990.40 respectively, citing the increase in fuel landing price and depletion of K13.5 billion in the PSF.

In a statement announcing the pump price increases, Mera said it had to hike the prices of the commodity after noting that “covering of importation losses through the PSF could not be sustained in July, October and November 2018 as the PSF funds had been depleted.”

But Nation on Sunday has established that Nocma, a government company that was established to import and manage fuel reserves, has for the past 10 months collected K16.9 billion in fuel levies, but not been remitting the same to Mera.

Nocma spokesperson Telephorous Chigwenembe said in an interview that Nocma owes Mera K16.9 billion, but said Nocma was also asking Mera to settle K13.8 billion outstanding importers fuel loss trading claims.

However, Mera, in a press statement soon after increasing the fuel prices, claimed that as of June 30 2018, outstanding importers fuel loss trading claims was standing at K9.5 billion.

Chigwenembe said Nocma has been failing to remit money to Mera because the company was hit by serious cash-flow problem resulting from tough business environment coupled with the decision by Petroleum Importers Limited (PIL) to stop buying from Nocma.

“We have since written Mera, asking that we make cheque arrangements for the two parties to settle the differences. Once we get Mera’s response on this, the issue will be sorted out,” he said.

Chigwenembe, however, said Nocma feels relieved and optimistic that it will start paying the outstanding levies as Mera was implementing new fuel laws where it will be directed that all wholesale licence holders will be buying 50 percent of their requirement from Nocma.

Mera consumer affairs and public relations manager Fitina Khonje could not confirm nor deny that Nocma owes the regulator billions of kwacha in levies and could not also comment on the authority’s failure to settle trade balances as claimed by Nocma.

She, however, in an email response, said Mera has a duty to review and validate fuel importers trading accounts on a monthly basis to ensure that the declared losses, levy collections, which include PSF reflect the true transactions as invoiced by international suppliers and confirmed by Malawi Revenue Authority (MRA) imports data.

“Mera would not allow any importer to impact the performance of the fuel market through holding of third-party funds.

“Validation of importers trading accounts is an ongoing exercise. Any violation constitutes a breach of the law and there are defined penalties. Mera has in the past taken to court private licensed importers that were found in breach of the law and was able to fully recover the outstanding amounts with interest and penalties,” she said.

Khonje said when Mera suspects and is investigating any non-compliance with levy remittance stipulations, the first step is to freeze all refunds for any declared importation losses by the importer, equivalent to the money under investigation.

“In such cases, Mera would only pay out this money to the importer when issues under investigations are resolved. Mera has also in the past withdrawn importation licences to limit further financial exposure until the matter in question is resolved,” she said.

Nation on Sunday established that in 11 months, Nocma’s competitor PIL collected and remitted K50 billion in levies and taxes to government.

One head of an oil marketing company, who did not want to be named, questioned Mera’s directive for them to be buying 50 percent of the fuel from Nocma, saying it was not making sense for the oil marketing company to be buying fuel from another oil marketing company.

“It is not making sense. Nocma has two licences as an importer as well as a retailer. The company, using its political influence, is eating on our market by taking away our big customers, why should then we be buying from our fellow oil marketing company?” the executive queried.

Former Minister of Energy Grain Malunga said the problem was that Nocma and Mera deviated from their original mandate of safeguarding fuel security for Malawi and regulating the energy sector to ensure fair competition and protecting the consumers.

He said Nocma was not expected to be making losses if it were to operate as a private company.

Malunga, however, said Nocma was serving companies that are linked to government, making collection difficult.

“Look at Escom; Nocma is supplying fuel to Escom while Escom is producing electricity that is sold at a low rate. Escom is controlled [hence] cannot increase tariffs.

“We have a network of social instability and consumers are suffering. It is becoming difficult for Mera to level the playing field. Mera was not supposed to get involved in the market,” he said.

There are several levies and taxes include the energy regulation levy, the road levy, Malawi Bureau of Standards (MBS) cess levy, safety net levy and the Price Stabilisation Fund (PSF). n

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