Tanker operators, Nocma tussle over fuel importation
The National Oil Company of Malawi (Nocma) is challenging an injunction which Fuel Tankers Association of Malawi has obtained against Nocma’s use of Delivery Duty Unpaid (DDU) system of importing fuel into the country.
Nocma’s acting Chief Executive Officer Hellen Buluma said their lawyers are looking at obtaining a stay on the injunction and that if that fails, they will go ahead and appeal at the Supreme Court.
“This is just an injunction, so Malawians should not panic. It will be resolved and the country will continue having enough fuel,” Buluma said.
The DDU system allows the suppliers to identify transportation companies to transport the fuel into the country and the suppliers also bear other costs and risks of transporting the commodity.
DDU is widely considered more expensive than the ex-tank system of importing the fuel but Buluma said the claims are unfunded.
“Nobody has come forward with facts that support the claim that DDU is expensive. In some routes DDU is expensive but in others, ex-tank is expensive,” she said.
The ex-tank system involves the delivery of a product by the seller to a buyer in bulk from the storage tank designated by the seller.
Buluma said Nocma prefers the DDU system to ensure safety and security of fuel where all the risks and costs are born by the supplier.
“On the face of it, you could say the ex-tank system is cheaper than DDU but when you factor in all those risks and costs you will find out that it is not as cheap.
“By the way, we have contracts of importation of fuel running under the DDU system. We have letters of credit worth $20 million. If we abruptly stop the system what happens?” she queried.
A sworn statement in support of the application of the injunction by the fuel tankers association’s lawyer Sheffa Mumba says fuel importation regulations provide for the use of the ex-tank method for the importation of the commodity into the country.
Judge hearing the matter Charlotte Malonda said upon consideration of material before her, she came to the conclusion that there is a reasonable cause of action and a serious issue to be tried.
Minister of Energy Newton Kambala said the government is looking for the best way of importing fuel into the country, looking at the whole economy.
He argued that some people are against the DDU system because it gives the suppliers a chance to choose transporters of their choice.
“For me, the DDU system of importing the fuel is safer as the supplier bears all the costs. Actually, some people who have been in the industry for a long time have come to me saying DDU is sometimes even cheaper but we also want to create jobs for Malawians,” Kambala said.