Parliamentary Budget and Finance Committee Chair Ganda disagrees with fuel report, urges ACB to probe NOCMA

Parliament on Thursday, May 27, 2021 adopted a ‘Special Report of the Parliamentary Committee on Natural Resources and Climate Change on the Process of Procuring Fuel by National Oil Company of Malawi (NOCMA) and the Role of Malawi Energy Regulatory Authority (MERA),’ which was presented by the committee’s Chair, Welani Chilenga.

There have been disagreements between the Malawi Energy Regulatory Authority (MERA) and National Oil Company of Malawi (NOCMA) over the award of fuel contracts to two suppliers by NOCMA, with the former claiming procedures had been flouted.

Ganda speaking to members of the press at Parliament on Thursday after the fuel report presentation and adoption
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MERA has refused to approve NOCMA’s 2021 to 2022 application to offer fuel supply contracts to Independent Petroleum Group (IPG) and Lake Oil Limited, citing lack of transparency in the bidding process, among other reasons. MERA has also ordered NOCMA to offer fuel supply contracts to two other companies on the bidders list, Trafigura and Oryx. NOCMA is having none of that, arguing MERA has overstepped its mandate and meddling in the process of fuel procurement, which is its legal mandate.

The Parliamentary Committee on Natural Resources and Climate Change stepped in to resolve the impasse, separately meeting officials from NOCMA, MERA and other stakeholders to find the way forward.

During the presentation of the report in Parliament, Chilenga said the committee recommends that since the Public Procurement and Disposal of Assets (PPDA), Government Contracting Unit, the Ministry of Justice and the Anti Corruption Bureau (ACB) already gave their nod to NOCMA with regard to the choice of the companies, and that since there has been a four-month delay in the procurement of fuel, NOCMA should proceed with administrative arrangements within the law and procure fuel to avoid a fuel crisis.

The committee also recommends that “due to the damage caused by MERA for the past eight months in delaying the fuel procurement process, the President should consider dissolving the MERA Board”, and that ACB should launch an investigation into the alleged MERA meddling.

But while she agrees with some aspects of the natural resources and climate change committee’s report, Chair for the Parliamentary Committee on Budget and Finance, Gladys Ganda expresses reservations over some aspects of the report, including the endorsement of one of the suppliers, Lake Oil Limited.

Ganda, a former Deputy CEO at NOCMA, alleges that Lake Oil Limited is on the verge of being declared bankrupt in Tanzania and that it is currently fighting for its survival in the courts.

“My humble opinion is that it is not prudent for NOCMA to engage that sort of supplier because our forex reserves are always a challenge and this requires a supplier to be offered a Letter of Credit for 90 days. If the Reserve Bank has no forex , it fails to issue out a Letter of Credit to that supplier. This then requires a supplier who is financially stable and can supply fuel on open credit.

“Lake Oil Limited has previously failed to pay for their own imported fuel because they failed to issue a Letter of Credit for their own fuel. They simply don’t have the capacity to import and deliver fuel using their own resources,” Ganda told Nyasa Times in an interview on Thursday, further alleging that Lake Oil Limited owes other companies money in the region of over US$30 million.

The Nsanje Lalanje Member of Parliament revealed that Lake Oil Limited were previously offered a contract to rehabilitate the Malawi Cargo Centre in Dar es Salaam. They failed to pay off Dalit who had rehabilitated the facility but could not commission and it was NOCMA that commissioned the Malawi Cargo Centre.

The Budget and Finance Committee Chair also faulted NOCMA for sidelining MERA in the identification of suppliers, arguing that legally, NOCMA is supposed to get approval first from MERA before seeking approval from PPDA.

“In this case, NOCMA managed to get an approval from PPDA without MERA’s approval. They clearly flouted set procedures. I call upon ACB to investigate NOCMA on the issue of Lake Oil Limited and flouting bidding procedures by failing to get premium approval from MERA,” said Ganda.

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