The Public Accounts Committee (Pac) of Parliament has said it is baffled by National Oil Company of Malawi (Nocma)’s decision to disregard orders from the High Court and the Anti- Corruption Bureau (ACB) in the award of 2021-22 fuel importation deals.
Pac Chairperson Shadreck Namalomba Wednesday said the way Nocma had handled the issue of fuel importation contracts from the start smacked of under-hand dealings.
He said they were in the process of summoning Nocma officials to justify their actions.
Pac’s bewilderment follows reports that Nocma ignored advice from the High Court and ACB to award fuel importation contracts to Lake Oil Limited, Dalbit International Limited and Camel Oil using Ex-tank incoterm and has, instead, introduced a new incoterm called Delivered At Place Unloaded (DPU).
In the Ex-tank scenario, the supplier delivers fuel at the ports of Beira, Dar es Salam or Nacala on normal import terms of Free on Truck (FoT). FoT is where the buyer takes the responsibility for transportation costs and risks when the goods are loaded on the truck.
However, the newly introduced DPU requires that the seller delivers the goods, unloaded, at a named place of destination. The seller covers all the costs of transport – export fees, carriage, unloading from main carrier at destination port and destination port charges— and assumes all risks until arrival at the destination port or terminal.
Nocma Deputy Chief Executive Officer Hellen Buluma told fuel transporters in Lilongwe on Tuesday that her organisation’s legal team scrutinised the High Court order and established that it did not restrict the awarding of fuel contracts to Ex-tank only.
Buluma claimed that, after making the observation, Nocma sought clarification from the ACB, which cleared it to award the contracts using any other incoterm apart from DDU.
She said Nocma has thus awarded the contracts at 75 percent DPU and 25 percent Ex-tank.
This is despite that, in a letter dated August 16 2021, ACB Director General Martha Chizuma advised Nocma to use Ex-tank incoterm only when issuing importation contracts.
“As clarified during the meeting, our understanding of the ruling by the court was in the context of the fact that the whole ruling simply makes reference to two methods of fuel importation i.e DDU and Ex-tank.
“In addition to this is the fact that your own bid document, by which this procurement process proceeded, only mentioned the two incoterms, DDU and Ex-tank. Accordingly, for us if you could not proceed by the way of DDU as per court ruling, the only other method to use was the Ex-tank method,” Chizuma said.
But in an interview Wednesday, Pac Chairperson Namalomba said his committee was baffled by Nocma’s lack of respect for advice from the court and ACB.
“To be honest, we are shocked and we will summon them to explain their actions. Honestly, this smacks of corruption,” Namalomba said.
In her justification of the adoption of DPU as a new icon term for importing fuel into Malawi on Tuesday, Buluma said using Ex-tank alone could crash Nocma in a flash.
Among other things, Buluma said Nocma pays K3 billion to the Malawi Revenue Authority (MRA) in duty every month, adding that the money is paid after selling the fuel.
She said adopting Ex-tank wholesale could mean Nocma paying the K3 billion to MRA upfront at borders every month, the money, she claimed, Nocma does not have.
However, one expert said it was not true that payments to MRA would always be made upfront at borders every month, saying there are other options.