Malawi Energy Regulatory Authority (Mera) says it has put in place alternative measures to avoid a fuel crisis following Anti-Corruption Bureau’s (ACB) suspension of fuel supply contracts at National Oil Company of Malawi (Nocma).
In an interview yesterday, Mera spokesperson Fitina Khonje said the energy regulatory body has activated a waiver of the Strategic Fuel Reserves (SFR) which requires oil marketing companies to uplift 50 percent of their volumes from the reserves.
She said: “Nocma has also been allowed to uplift up to 10 percent contingency volumes from suppliers with whom Nocma has running contracts with. These waivers will be lifted when Nocma finalises its new fuel procurement processes.”
Besides, Khonje said Mera will be holding meetings with various stakeholders to discuss other contingency measures that can be applied.
Last month, ACB suspended the controversial fuel supply contracts at Nocma, a State-owned entity, to pave the way for investigations into alleged anomalies in the process. The contracts were scheduled to commence from July 1.
The intervention came against a background of a bitter fight between the boards of Mera and Nocma management which in turn led the Human Rights Defenders Coalition (HRDC) to ask the graft-busting body to look into the matter.
The ACB’s probe means Nocma cannot proceed to award any of the contracts.
When asked on progress of the investigations, ACB principal public relations officer Egrita Ndala yesterday said she would get back to The Nation once a response was ready.
Nocma procures 50 percent of the country’s required fuel volumes. It is complemented by Petroleum Importers Limited (PIL), a consortium of private sector petroleum trading companies.
In a separate interview yesterday, PIL general manager Martin Msimuko said they, as partners in the fuel import industry with Nocma, had to factor in the shortfall that may be on the market with approval of Mera to ensure security of fuel supply.
He said the agreement is in place and that PIL is importing enough fuel to cover for any shortfall for the next three months.
“Due to our experience and relationship with the suppliers, they have maintained the same contractual premium that has been in place for the past nine months,” said Msimuko.
Our efforts to speak to Nocma deputy chief executive officer (CEO) Hellen Buluma proved futile as she could not be reached by phone.
Amid controversy surrounding the fuel supply contracts, the HRDC wrote ACB to investigate allegations of corruption and abuse of office in the procurement processes.
Previously, Buluma, then acting CEO, also lodged a complaint to the ACB alleging that some government officials, including presidential aides and Cabinet ministers, tried to influence Nocma to include some suppliers on the list of hired companies.
In January, Mera board declined to approve Nocma’s application for approval of prices of suppliers citing concerns of overpricing.
Subsequently, Mera asked Nocma to only contract selected suppliers at a price suggested by other lower bidders.
Mera argued that the contracts were costly by about $50 million (about K45 billion) due to the Delivery Duty Unpaid (DDU) procurement system that Nocma had opted for oil suppliers on the Southern Corridor or the Beira route, who allegedly quoted higher premiums than other bidders.