Talking Blues: With corruption in fuel tenders and contracts, all Malawians lose

After needless drama, Martha Chizuma was duly confirmed as the Anti-Corruption Bureau Director-General and boy, does she have a lot on her plate!

Even though apart from the inimitable Gustave Kaliwo Esq, no one has excelled in that post, expectations are sky-high.

Chizuma: Honeymoon is over for corrupt criminals.

Her predecessors came brandishing CVs that dazzled. With Kaliwo’s notable exception, those CVs proved to have disappointingly little or non-existent value vis-à-vis:

• Withstanding political pressure,
• Successfully prosecuting and locking up corrupt big fish,
• Exhibiting Kaliwo-like courage when pursuing ‘Che-Jumos’ and
• In generally making the corrupt uncomfortable.

Here on Talking Blues, we wish Madam Chizuma well in her challenging but achievable task ahead.

That said, I want to reshare a social media influencer’s recent contemplation on our fuel importation woes.

The state-owned National Oil Company of Malawi (NOCMA) imports the largest share of oil into Malawi (314 million metric tons per year).

The next largest is Petroleum Importers Limited (PIL) which imports more than 200 million metric tons. Other independent importers import smaller quantities.

This discourse focuses on the taxpayer-funded NOCMA.

NOCMA advertises tenders for suppliers to supply us with fuel. The contracts awarded usually run from 1 June to 31 May.

The latest round attracted more than 20 bidders.

Fuel enters Malawi through three ports, and under normal circumstances, NOCMA ought to order supplies as follows:

• 20% of the national supply through Nacala;
• 30% through Dar es Salaam; and
• 50% through Beira.

These percentages were premised on several factors, with the critical factor being fuel’s transportation cost from port to Malawi.

Apparently, Nacala is the cheapest. Its added advantage is that Malawi could use the rail from Nacala to Malawi to significantly lower transportation costs and fuel prices for us, the consumers.

The 20:30:50 ratio notwithstanding, the supplies ordered by NOCMA are as follows:

• 1% through Nacala;
• 49% through Dar es Salaam; and
• 50% through Beira.

When a tender is floated, each bidder is supposed to quote for each route and product, i.e. provide quotations for petrol and diesel for all three routes.

As you all know, the price of fuel is determined by global factors, including future supply and reserves, demand from major countries, and global politics.

This is, therefore, the straightforward piece of the jigsaw.

However, for us, on top of the actual fuel price, there are added costs of insurance, shipping, and storage costs en route to and at Nacala or Beira or Dar es Salaam and, of course, the suppliers’ profit.

When assessing the bids to choose who will supply us with fuel, ceteris paribus, suppliers offering the lowest prices stand a higher chance.

This is a no brainer.

No government in its right mind would want to skin its citizens alive. More so, a government that claims to have its peoples welfare at heart.

During the assessment, NOCMA ranked the bids from number 1 to 20 as per their competitiveness.

Usually, you would expect that the lowest bidder would be picked. If the lowest bidder is weak in a specific critical assessed area, then the second or third or fourth will be chosen.

What did our NOCMA do?

It picked Nos. 11 and 14. Only two suppliers.

One of the suppliers picked, it appears, did not even bid for the Beira route. But will still be assigned to supply through that route.

Now brace yourself; the suppliers selected by taxpayer-funded NOCMA are US$54 million more expensive than the cheapest supplier who has been left out.

MK 41,779,000,000 more expensive.

How can NOCMA even begin to explain the selection of suppliers who are MK41.8 billion more expensive than their competitors?

You think this is all there is? You are damn wrong.

There is the issue of “ex-tank” versus “DDU (delivered duty unpaid)”. What the heck are these?

Both are methods of delivering fuel from the ports in Nacala, Dar es Salaam and Beira to us in Malawi.

The costs incurred in this process are storage, freight, and insurance costs.

Now, to protect you and me, the Malawi Energy Revenue Authority (MERA) monitors these three elements. There is transparency here. However, monitoring only works when the fuel is delivered using the “ex-tank” system.

With the DDU system, once the supplier has the contract, the supplier has complete control, and MERA has no way of monitoring the storage, freight and insurance costs incurred.

In other words, DDU lacks transparency, and without transparency, Malawian consumers – you and I – get ripped off.

Therefore, all patriotic “God-fearing” Malawi leaders should advocate and demand the ex-tank system. In theory. Not so?

Unfortunately, not.

Some in the current government want the ex-tank system, and others are agitating the DDU rip-off for some unfathomable reason.

Shocking, isn’t it?

We were promised servant leadership. Yet here are “servant leaders” conniving with some forces to create grounds that are fertile and conducive for corruption!

Since when did self-enrichment creep into the definition of servant leadership?

And, it gets worse.

If you have been following developments at NOCMA, you will recall that the Chief Executive, the Director of Finance, and the Director of Procurement were suspended a while ago.

In a typical we-got-all-the-time-in-the-world-Tonse-Government style and fashion, the three have neither been reinstated nor replaced.

Meaning that the selection of suppliers who are MK 41,779,000,000 more expensive is happening under the watch of an emasculated senior management team teeming with individuals in acting capacities.

In whose interest is this?

Why are the powers that be exposing us to the vagaries of unchecked greed?

I know this is a lot of information to process, so I will stop here.

However, before I sign off, I want to leave you with a few thoughts.

Like me, are you wondering: “Why don’t we transport more of our fuel by rail, which is cheaper?”

The answer is simple. Some of our transporters are politicians or are connected to politicians, and they want business for their trucks. Hauling fuel, at our expense, is how they make their billions.

The real problem however is that:

a) the NOCMA leadership tug of war,
b) the lack of transparency in the DDU system,
c) our failure to make more use of the rail transport for fuel,
d) the dubiously MK 41,779,000,000 more expensive contracts, and
e) the hypocritical Tonse “Servant Leadership” enabling these challenges,

all conspire to pad the fuel cost with easily avoidable costs.

Since practically all the goods and services we buy and enjoy have elements of transport costs, it means that ALL of us are paying. To feed the greed of a few.

Till when my brothers? Till when my sisters?

Once again, Congratulations, Madam Chizuma! You have truckloads of people to send to jail. Jail them madam, that’s the only way we can breathe again.

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3 years ago

Th the writer is missing some information deliberately to demonise DDU…..this is the major difference…..with DDU the seller is responsible for the fuel from wherever he buys up to NOCMA, and NOCMA pays for the fuel received, meaning the seller is respondible for insurance, freight, and most critical transit LOSSES, with Ex_tank the sellet obligations ends at port, i.e Beira Nacala and Dar….NOCMA is responsibke fir transpirt, insurance and transit Losses, which if not carefully handled can render NOCMA Insolvent within a short period of time….these are fuels not stones, they evaporate….also few if any transporters can accept to be… Read more »

3 years ago
Reply to  Bwande

Each one of these two methods has disadvantages. The DDU disadvantages outweigh the Ex-Tank method.

The main disadvantage for of DDU are NOCMA has no control over movement and there are hidden costs and marks which NOCMA would have no basis to challenge.

Ex-Tank method allows NOCMA opportunity to track shipment and there would be no hidden transport and mark up costs.

NOCMA had capacity to deal with transport costs and allows NOCMA more control on availability of fuel under Ex-Tank method.

Musatipusitse apa… tikusambulani pompano.

3 years ago

Wooooow…. My Malawi, Mayi Malawi, Our Malawi, am actually not singing, am crying. Someone somewhere is taking our brothers and sisters for granted.

Let us shine our eyes and expose the lot and the rout.

Many thanks for this eye opening article.

Victor Sam
3 years ago

Did I miss something? What did the inimitable gustav kaliwo achieve?

3 years ago

DDU is a massive rip off.

Justice for all
Justice for all
3 years ago

This article made to like to read it is really true our politicians are killing innocent people through their dubious business why the government doesn’t focus on rehabilitation the rail transport which is cheaper the reason u can find in there s article shame Malawi

3 years ago

our leaders are betraying us. why are they silent on this nonsense

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