Oil companies outline by-laws challenges
Oil marketing companies in the country have welcomed the recently revised Franchising and Dealership By-laws of 2015 with mixed feelings, observing that while they seek to level the playing field the by-laws also pose several challenges.
Naftal Kakwambi, chairperson of Oil Marketing Companies Limited (OMCL), a grouping of franchise dealers training in petroleum products in the country, observed that there are several challenges, including a negative impact on fair competition.
In a written response to a Business News questionnaire on emerging issues in the oil industry, including concerns of dealership retailers, Kakwambi said OMCL has engaged Malawi Energy Regulatory Authority (Mera) on the potential challenges.
He said: “Mera’s request to OMCL members is that all existing franchise agreements need to be aligned to these by-laws. It is worth noting that while we agree and support the levelling of the playing field through the by-laws, the implementation of the by-laws comes with both good and various challenges.
“There are challenges such as the [negative] impact on fair competition in the industry, especially if the by-laws promote similar terms and conditions in all the agreements; whether it [by-laws] will really ensure and promote true empowerment of majority and ordinary Malawians seeking to join the industry or just serve and promote the interests of the very few who are already in the industry.”
He added: “The process to follow during the change of retail site operators might be too long and cumbersome and can cause financial and economic losses to both parties [involved] to the detriment of the relevant stakeholders, notably communities and customers.”
Kakwambi, who is also managing director of Engen Limited (Malawi), said OMCL have since engaged Mera and other stakeholders to find amicable solutions to deal with the challenges.
Mera told Business Review last week that the by-laws are set to bring sanity in the petroleum market where, for instance, retail franchise dealers expressed several concerns bordering on unfairness and big brother syndrome by oil companies.
Among others, the retailers claimed their relationship with fuel companies is characterised by fear, intimidation and mistrust.
In response, Kakwambi described the assertion as “shocking and regrettable”.
He said while he found it difficult to respond to the general statement without supporting factors or evidence, he acknowledged that for the industry to prosper and contribute to the economic development of the country good and sound relationship between all players is a prerequisite.
Said Kakwambi: “It is unfortunate that the retailers feel that way. Indeed, if these allegations can be substantiated or do exist, they should be dealt with as soon as possible and I would encourage the retailers to directly engage their suppliers [oil companies] and resolve all these issues which led to them having such feelings of fear, intimidation and mistrust.”
Among others, retail franchise dealers alleged that oil companies impose on them unfavourable conditions, leading to some of them making losses and losing assets such as houses to lenders.
Three weeks ago, the Competition and Fair Trading Commission (CFTC) said it had commissioned a market inquiry to assess the state of competition and business environment in the liquid fuels and gas industry in the country. n
