* If these allegations are true then it’s criminal offense worth to be investigated by the authorities
* Facts are that NOCMA has completely excluded IHB as its contracted transporters and have taken in 4 associations
* The concern should not be which Malawian is hauling but rather why are foreign trucks still in use when other Malawians’ are parked
By Duncan Mlanjira
International Haulage Brokers (IHB) emphasizes that it operates within the confines of regulations as set by the authorities in fuel transportation and dares any concerned member of the public to report to Anti-Corruption Bureau (ACB) or any other authority to probe the “unfounded” allegations leveled against it in the way it does its business.
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This follows some serious allegations that an anonymous member of the public has authored and circulated on social media, alleging that IHB has been defrauding the state as well as exploiting local fuel transporters.
The unsubstantiated statement goes further to say the issue attracted the attention of Parliamentary Committee on Energy, “which duly proved the illegality of such brokerage fees”, saying it is an “abuse of taxpayers in the name of brokerage fees by IHB”.
The allegations goes further to say “local fuel transporters have persistently complained about [IHB’s] exploitative conduct”, saying they “are duped in many ways including deduction of fuel losses from their payments, hefty satellite tracking charges, deliberate delays in payment so that transporters can access loans from the same IHB but with exorbitant interests”.
When contacted, IHB’s General Manager Chrispin Mussa and Finance and Administration Manager Leyneck Manjandimo, both said the allegations are “unfounded”, saying the authors prefer to remain anonymous because “they are doing all this out of malice and jealousy”.
“It is not in the interest of IHB to respond to propaganda social media write ups,” Mussa said. “At IHB, we have an open door policy, always cherishing contact and dialogue and operate in a transparent and accountable manner.
“However, in the interest of the public interest — and also for you for reaching out to us for our side of the story — we have been compelled to respond,” Mussa said.
The chief accountant then sent responses to our questionnaire — first correcting the anonymous author who indicated that IHB established in 1994/95 but the transport brokerage firm was duly registered by government in 1997.
It got registered by the registrar of companies as “a partnership entity and started operating in 1998 as a provider of transport broking services to various fuel importers while the then Petroleum Control Commission (PCC) was the sole importer of petroleum products.
He explains that currently they do business with Petroleum Importers Limited (PIL) — Puma, Total, Petroda and Vivo — while their services with National Oil Company of Malawi (NOCMA) has been terminated.
“It is worthy mentioning at this point that provision of transport broking services to fuel importers by various industry players existed many years even before the advent of IHB as it was being carried out by the likes of MITCO, Manica, Multcom Ltd, Agmin Ltd, Transport Logistics etc.
“The business of brokerage service provision is not only unique to the wet cargo transport sector/industry, as one also finds the same in such other trades as the insurance business as well as the dry cargo transport sector.
“The business of a transport broker and specifically as in respect of IHB is to act as a middle entity between fuel importers on one hand, and the tanker operators (as subcontractors) on the other.
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“IHB gets it’s business through participation of rigorous tender bid processes upon meeting the required conditions set out there in as advertised by the fuel importers through the print media from time to time.
“The brokerage price — vis-a-vis the brokers revenue — is spelt out in the tender bid document, as such this represents a directly negotiated figure between the fuel importer and the qualifying prospective broker.”
Manjandimo emphasizes that the regulatory body — Malawi Energy Regulatory Authority (MERA) “doesn’t take part, nor are they party to the brokerage contract that is between the broker and the fuel importers”.
“Consequently, the fuel importer pays this element through one of their import margins as the outsourcing of a transport broker, is a matter of an administrative strategy and arrangement to enable the importer maintain a well focused concentration on their core business of product procurement activities.
“The brokerage commission which an importer pays to the broker — currently at 2.5% of the transporters’ invoice amounts to the importer — enables the broker meet own expenses of office maintenance for our truck parking offices in Blantyre, Lilongwe, Mzuzu as well as Beira in Mozambique and Dar es Salaam in Tanzania in the form of salaries, office and parking yard rentals, fuels, utilities etc.
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“In addition, the transport broker also renders administrative and financial support services — on cost recovery basis — to the subcontractors in such things as toll fees; marine, public liability and fidelity insurance policies; vehicle calibration; satellite tracking as well as the provision of side tank fuels, just to mention a few.”
The chief accountant breaks down how the brokerage commission is claimed from an importer as follows:
* When a transporter has offloaded a product load in Blantyre from Beira, the transporter will invoice IHB of 0.5% of the quantity loaded and a 20% withholding tax on the brokerage commission;
* In turn IHB will then invoice the importer at the MERA prescribed rate plus commission 2.5% as well as surtax on commission at 16.5% i.e MK86.80+2.17+0.35 = MK89.32;
* In this regard, the importer will on the due date of 45 days credit, pay IHB at the rate of K89.32 after deduction of any in-transit product losses in excess of the industry allowable loss threshold of 0.5% of the quantity loaded and there is a 20% withholding tax on the brokerage commission.
* Upon receipt, IHB will then pay the transport subcontractor at the above rate of K86.80 less the excess in-transit losses deducted at source by the importer;
* In this vein, what the IHB retains is an amount comprising the brokerage commission net of withholding tax at 20%;
* For argument’s sake, if the transporters’ invoice amount, in a good month, adds up to say K1.4 billion, brokerage commission will amount to K35,000,000 and net withholding tax payable will amount to K28,000,000;
* The transporter will be paid the K1.4 billion net of the in-transit losses.
“It should be mentioned and emphasized in this context that the sum of the K1.4 billion payable to the subcontractors, represents payment for invoices received from all the subcontractors which currently number in excess of 80 different transporters, and not just directors of IHB.”
He also said the Broker is entirely responsible for all the fuel during the transit period from port to destination and that in the case of Beira, the actual fee translation is about K1.70 per liter and not K50 while research shows that previous brokers used to charge as much as 7.5%.
In his contribution, the General Manager Mussa disclosed that their contract with NOCMA Limited ended on June 30, 2018 only did so in small way between 2020/2021 and was not directly with them but through their suppliers.
He indicated that the service they did with NOCMA may account for “only less than 20% of their volumes — which means that since then, IHB only actively participates in the 50% PIL allocation”.
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“However, the sentiments flying on the social media seem to suggest that all the volumes are being uplifted by IHB which is not the case. The current import split or share between the two major importers, PIL and NOCMA, is 50% each.
“All the other import costs components such as insurances/handling, the allowable in-transit losses which are purposely provided for in the price build as alluded to in the social media write ups are claimable by the importer and not passed on to a broker, as such it is a misconception to insinuate that the same gets paid to the broker.”
Thus IHB challenging the distributors of the social media sentiments to engage the ACB or any other authorities to investigate the issues they are raising, emphasizing that their responses to us are “factual and verifiable from all the respective stakeholders”.
“In summary, the brokerage transport contract is and has always been between the importer (who pays all the costs) and the broker. MERA is not a party to the transport brokerage contract and consequently do not pay anything to the broker.
“The broker operates for all transport subcontractors, claims their dues from the importer and pays all what has been received on behalf of all the subcontractors back to them.
“Only the road freight costs element, claimed by the importer from the price build up, is the one that the importer pays to the broker for onward payment to all the transport subcontractors, as such on the payments to a broker, this is the only element that affects the pump price;
“There is nothing illegal bordering on the activities of IHB as it gets her business through participation in tender bid processes;
“To insinuate that in 1994/95 IHB was in existence when it only got registered in 1997 is not factual and that IHBs’ commission is not 3% as is being shared while IHB revenue/commission is nowhere near to the amount mentioned.
“We emphasize that what is being circulated in the social media in regard to the conduct of the directors of IHB, as well as bordering on the activities of IHB, is not only misleading, but deliberately schemed and a ploy at its best to satisfy and gratify some personal vendetta of those originating the write ups.”
We sought to get confirmation with MERA as to whether the Parliament Committee on Energy did indeed pass a resolution to stop the fuel transport broking business as is being alleged in the social media, but at the time of publishing, no responses were received from the responsible officers.
