NOCMA should get lions share in fuel importation—Parliamentary Committee

By Gladys Kamakanda, MANA

Parliamentary Committee on Natural Resources and Climate change has recommended that the National Oil Company of Malawi (NOCMA) should be getting the lions share in fuel importation as it is a Malawian company.

The Parliamentary Committee’s chairperson, Welani Chilenga made the remarks Friday in Lilongwe when the committee toured the Lilongwe Strategic Fuel Reserves in readiness for NOCMA’s plans to start bringing fuel by rail from Nacala port.

MP Welani Chilenga

He said NOCMA was doing a tremendous job of making sure that the fuel storage reserves were sustainable in the country and it has stood the taste of time.

“During the COVID-19 pandemic, Petroleum Importers Limited (PIL) had scaled down the importation of fuel,” Chilenga said. “Supposingbthere was no NOCMA — what would have happened to this country? It could have been disastrous.”

Being shown the whole plant’s design

Having toured the Lilongwe facilities, the chairperson the committee was convinced that NOCMA was doing a commendable job of making sure that fuel storage is sustainable in the country.

He said the problem was that NOCMA had been given the same amount of fuel to import with Petroleum Importers Limited (PIL) — which the committee sees as not right but a big share should be given to NOCMA.

He acknowledged the challenges that NOCMA faces in importing fuel as most of the country’s fuel comes from Dar-es-Salaam instead of it being loaded from Mbeya which advantages foreign importers.

“Most of the country’s fuel comes from Dar-es-Salaam instead of it being loaded from Mbeya, which is only 100kms from Karonga as opposed to 1,000 kilometres from Dar-es-Salaam to Karonga.

He said previously there was arrangement that fuel should be transported from one wagon to another through rail up to Mbeya whereby trucks would be loading from Mbeya but for reasons unknown, PIL does not want to load from Mbeya but prefers Dar-es-Salaam

This is also the situation now for all importers which disadvantages Malawian transporters.

Helen Buluma, NOCMA’s deputy CEO

Chilenga said the committee would lobby that all transporters should be loading fuel from Mbeya as all facilities are there and this would benefit Malawian transporters because Tanzanian truck drivers wouldn’t want to move with empty tanks from Dar-es-Salaam up to Mbeya to load and then bring the fuel to Malawi.

NOCMA deputy Chief Executive Officer, Helen Buluma commended the Parliamentary committee for touring its facility, saying the august House has an oversight role for NOCMA and its operations as it’s wholly owned by government.

She said NOCMA makes K2.00 per litre of importation margins when they sell on wholesale which undermines the company’s operations especially that NOCMA unlike PIL handle the product which comes into their tanks.

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This is like bonded warehouses and therefore the handling costs and charges for them are quiet heavy.

Buluma added that NOCMA makes K7.00 loss per litre in handling despite meeting up on those cost elsewhere but they want Parliament and Malawi Energy Regulatory Authority (MERA) to revise the importers margin.

Lilongwe strategic fuel reserves have the capacity of 25 million litres —18 million litres for diesel, 7 million for petrol and 4 million for water.

Another route that can be highly considered to transport petroleum is through the Nacala rail corridor — from Nacala to Balaka.

Most efficient way of transporting fuel

When MERA adjusts fuel prices, it applies the Automatic Pricing Mechanism as according to in-bond landed cost (IBLC), which is the weighted average of costs for each route the fuel is transported.

Beira route is set at 50%; 30% through Dar-es-Salaam and 20% through Nacala.

If the fuel transportation was to be used through rail (Beira and Nacala) as was done during President Dr. Hastings Kamuzu Banda’s Malawi Congress Party (MCP)-led government, pump prices could have been much lower.

Trains can carry up 50 wagon tankers per trip while road tankers are mostly single carriers.—Additional reporting by Duncan Mlanjira, Maravi Express

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