National Oil Company of Malawi (Nocma) has stirred more controversy in the fuel supply deal by issuing fresh contracts using a new procurement method
not part of the bidding document to the chagrin of hauliers.
Nocma deputy chief executive officer Helen Buluma announced the newl y adop ted procurement method known as Delivered at Place Unloaded (DPU) during a meeting with Transporters Association of Malawi in Lilongwe yesterday.
DPU—which is not part of the High Court order and Anti-Corruption Bureau (ACB) directive—has not impressed fuel transporters who argue that it is similar to the Delivered Duty Unpaid (DDU) system they protested against it favours foreign transporters.
But despite the protests, Buluma said Nocma was free to use any method apart from DDU. She said in the newly issued contracts, they have used DPU and Ex-tank.
She said the DPU has lower risks as both the supplier and the buyer have almost equal obligations
Buluma also claimed that when they sought clarity from ACB on the matter, the graft-busting body admitted to have erred in its interpretation of the High Court order to ask Nocma to use Ex-tank only. She said ACB had allowed them to use any method of their choice.
But the letter of clarification we have seen from the ACB, signed by director general Martha Chizuma, does not give Nocma a blank cheque as it instead suggests that based on the court order, if DDU could not be used, then the only option was Ex-tank.
Transporters obtained an injunction early this year restraining Nocma from using DDU.
A fuel loading order from Nocma dated October 6 2021 indicates that about 50 foreign transporters have already been engaged to transport fuel into Malawi, a move which apparently displeased local transporters who attended yesterday’s meeting.
In an interview yesterday, Fuel Tankers Operators Association (Ftoa) chairperson Gordon Luhanga said the new procurement method is as bad as DDU as it favours foreign suppliers .
He said: “We [locals] need a system that favours us and this is why we are willing to engage with the government.
“Under the DDU, the suppliers have a bigger say on who to contract for transport and usually they use their own transporters. This is why we want an arrangement that gives us more than 80 percent chances.”
Speaking on behalf of Ftoa after their consultation, Kamunthu Kamoza said they want Nocma to address several issues, including the payment period.
Transporters want payment within 30 days after the issuing of invoices and that all transporters should be paid in kwacha to save the country of forex.
But in her presentation, Buluma lambasted transporters for resorting to going to court and holding strikes wherever there are misunderstandings instead of negotiations.
She said it is important that transporters avoid engaging in actions that disrupt or threaten security of supply of fuel as Nocma alone contributes about K3 billion in taxes to the
Malawi Revenue Authority (MRA) monthly.
During break time, t ransporters openly disapproved of the Nocma proposal.
“Nocma has blundered. We have petitioned a special Cabinet committee to consider abandoning DDU and using Ex-tank, but even before this is resolved, Nocma has already issued contracts under a new method,” said
one of the transporters.
But responding to the concerns, Buluma said the purpose of the meeting was not to give solutions or to agree on anything because Nocma does not make decisions on its own.
She said the meeting was meant to start an engagement that would lead to an agreement.
Some members also questioned the purpose of the engagements when transporters are already talking with a special Cabinet committee.
On the question of duplication, Buluma said she appreciated the superiority of the task force, but added that their engagement was planned before the task force came into being.
“The Cabinet task force is working on these issues at the most high level, but as you are aware, they also delegate specific institutions,” she said.
Procurement specialist Amos Nyambo, who is also former chairperson for the Malawi Institute of Procurement and Supply, faulted Nocma’s conduct, saying it was irregular and unfair to possible bidders.
He said that if the new method was not part of the bidding document, Nocma should have cancelled this tender and called for a fresh one.
Nyambo said: “We understand they did not want to go dry, but the best was perhaps to cancel the whole tender and seek a waiver to have a shorter bidding period and identify new bidders based on new conditions.”
In its call for tenders, Nocma used only two fuel procurement methods; DDU and Ex-tank. DDU refers to a system in which the supplier assumes all the risks for delivery of the product from external depots at the ports to various internal depots in the country. For Ex-tank, the buyer (Nocma) assumes all the risks.
Nocma was also embroiled in the contract award controversy for suppliers of its share of fuel into the country for the 2021/22 financial year.
Nocma—a State-owned company—imports 50 percent of national fuel requirements with the other half brought in by Petroleum Importers Limited, a consortium of private oil marketing companies