Ministry of Energy has faulted National Oil Company of Malawi (Nocma) in the award of fuel supply contracts, saying the selected tendering process lacked transparency and accountability.
Presenting a report in Parliament yesterday, Minister of Energy Newton Kambala said in the past, the tender selection process included one official from his ministry and one from the Malawi Energy Regulatory Authority (Mera) for transparency and accountability. He said this time around Nocma left out the other stakeholders.
He told Parliament that the selected suppliers had lesser capacity and offered higher premiums compared to other lower bidders.
Kambala said: “The above events are examples of unusual events that contributed to the stand-off between Mera and Nocma which attracted attention from Parliamentar y Committee on Natural Resources and Climate Change.
“The main issue is that Mera, as a regulatory authority for the energy sector, was unable to give Nocma an approval for procurement of fuel on account of expensive premiums and insufficient number of needed suppliers.”
The minister said Mera’s action was done based on its mandate in Section 9C of Energy Regulation Act and that high premiums based on the Delivered Duty Unpaid (DDU) were expensive.
U n d e r the DDU arrangement, the supplier of the fuel is responsible for the safe delivery of goods to a named destination, paying all transportation expenses and bearing all risks during transport, which is claimed later on.
The minister’s report followed the presentation of an earlier report on May 29 by the Natural Resources Committee of Parliament which moved government to intervene in the Mera- Nocma wrangle which threatens steady supply of fuel into the country.
In the report, the ministry agreed with Mera recommendations that Nocma should proceed with procurement of fuel only as stipulated within the law.
Nocma procures 50 percent of the country’s required fuel volumes; hence, government fears its failure to timely procure volumes threatens security of fuel supplies.
On the committee’s recommendation for Mera to stop meddling with operations of Nocma, government agreed and urged Mera to stick to its legal mandate of regulating the energy sector.
Committee chairperson Werani Chilenga could not be reached for comment on his phone. He was not in Parliament yesterday during presentation of the report.
The Board of Mera in January this year declined to approve Nocma’s application for approval of prices for suppliers, citing concerns of overpricing.
The Anti-Corruption Bureau is currently investigating the award of the fuel supply deals.