Gov’t should lord over fuel, not private operators—Parliament Committee

The Parliamentary Committee on Natural Resources and Climate Change has pointed out that fuel is a strategic commodity for the country and that it should therefore be managed – at all cost – by the government and not be left in the hands of private operators.

Currently, the state-owned National Oil Company of Malawi (Nocma) has a 55 percent import quota on fuel while the private sector oil marketing companies, under Petroleum Importers Limited (PIM), share the remaining 45 percent.

But the Committee recommended on Thursday during a meeting it had with officials from the Ministry of Energy, Nocma, PIL and other stakeholders in the petroleum domain that the government should have a 90 percent stake in the business.

“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,” Welani Chilenga, chairperson of the Committee said.

According to Chilenga the Ministry of Energy must speed up a bill to facilitate the arrangement to have Nocma handle 90 percent of fuel.

“The bill should be tabled in Parliament by next year. If the Ministry delays on the matter, this committee will bring the bill to Parliament,” he said, while asking fuel importers to accommodate small-scale transporters on fuel contracts.

But PIL decried the Committee’s proposals saying they would annihilate their trade.

PIL general manager, Martin Msimuko, said the proposals would mean closing PIL which is a private sector contribution that would not be in the best interest of the government as it would eventually mean stifling the private sector in the country.

“PIL has over the years delivered and operated alongside Nocma to ensure that Malawi has fuel,” Msimuko said, adding that relying on one importer would be detrimental.

Deputy director responsible for rural electrification in the Ministry of Energy, Patrick Silungwe, said the ministry supported the proposal to have the government handle a larger quota of fuel imports as long as the move does not choke the private sector.

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

Nocma deputy CEO, Helen Buluma, supported the Committee’s suggestion noting that in other countries it was government institutions that import fuel and the private sector buys from those government institutions.

“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 said.

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 the government to dictate matters on the importation of fuel.

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

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.

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