Petroleum Importers Limited (PIL) has warned the Natural Resources Committee of Parliament against proceeding with its decision to give 90 percent of fuel importation business to the State-owned National Oil Company of Malawi (Nocma).
Currently, PIL, which is a consortium of oil marketing companies, handles 45 percent of Malawi’s fuel business, with Nocma handling 55 percent.
Speaking at Parliament Building in Lilongwe when PIL, Nocma,
Malawi Energy Regulatory Authority and Ministry of Energy officials appeared before the committee, PIL Chief Executive Officer Martin Nsimuko said giving only 10 percent of the fuel business to PIL was tantamount to killing the firm.
Msimuko’s sentiments came after chairperson of the committee, Werani Chilenga, told Ministry of Energy officials to fast track the process of coming up with a bill that would enable Nocma to handle 90 percent of the fuel business.
Chilenga told the ministry that, if they would not bring the draft bill to Parliament by early next year, Parliament would be compelled to draft its own piece of legislation which would be brought to the august House as a Private Member’s Bill.
Among other things, Chilenga described fuel as a strategic commodity, adding that it would be suicidal to leave it in the hands of the private sector.
Chilenga argued that, when Cyclone Idai beset the country, PIL slowed down its fuel imports and Malawians had to rely on Nocma.
But Msimuko said the current arrangement, which sees Nocma and PIL bringing almost equal shares of fuel to Malawi, is good for Malawi as it ensures the security of supply, noting that where Nocma has issues PIL can supply, vice versa.
“If they push for the 10 percent [share for PIL], then they are closing PIL, which is a private sector contribution, and I believe that it would not be in the interest of our government to stifle [operations of] the private sector in the country,” Msimuko said.
But Chilenga said members of PIL were already involved in oil marketing and that they would rather concentrate on that business instead of combining the two.
PIL was born in 1999 after the then State-owned Petroleum Control Commission failed to run the fuel importation business.
This saw the International Monetary Fund (IMF), World Bank and Parliament recommending that the private sector take over the fuel importation business.
The death of PIL could leave Malawi with only one fuel importing firm, Nocma, which would put the country in a precarious position every time Nocma faces hiccups in the supply chain.
Currently, PIL and Nocma play a complementary role in ensuring security of supply in Malawi in such a way that when one of the firms faces challenges, the other provides the necessary cushion for the country.
Again, the death of PIL could take Malawi back to the pre- 2000 era, when fuel importation was in the hands of the State.
The IMF and World Bank recommended that fuel importation be handled by the private sector as part of the Structural Adjustment Programme.