‘Poor Malawians will suffer due to expensive fuel supply contracts’

Mzuzu

A social commentator says pump prices will go up to unsustainable levels and poor Malawians will pay if National Oil Company of Malawi (NOCMA) sticks with expensive fuel suppliers.

Mulotwa Mulotwa says there is a direct correlation between oil prices and cost of goods/services hence life would be hard if oil prices are poorly negotiated.

Mulotwa was commenting on the messy procurement of fuel by NOCMA which has led to disagreements between NOCMA and Malawi Energy Regulatory Authority (MERA).

Earlier this week, NOCMA published a notice of intention to award contracts for fuel supply but there were no prices indicated.

According to Mulotwa who has been keenly following the issue, prices are the basis of the NOCMA-MERA fight as NOCMA wants MERA to approve premiums without knowing what the final negotiated premiums would be.

“MERA is arguing that it is difficult to give a blanket approval without the figures for the final negotiated premiums against each supplier but NOCMA says that is interference,” said Mulotwa.

Mulotwa also revealed that on 19th May 2021, MERA Board requested for a meeting with NOCMA Board. NOCMA responded that their Board was of the opinion that should there be any meeting between the two Boards then it should be after the meeting with the Parliamentary Committee on Natural Resources and Climate Change.

On 24th May 2021, MERA requested to meet NOCMA Board but did not get a response to this very minute.

On how the oil deals have been approved, Mulotwa said NOCMA short circuited the system and acted clever, ignoring the regulator’s advice and used another channel [Parliament] to get the tender process approved.

“NOCMA argues that PPDA (Public Procurement and Disposal of Assets Authority) is the right Authority to approve the tender process and not MERA. MERA has not disputed that fact but suspects that just as the regulator was not given all the information to base its decision on, PPDA could have been hoodwinked as well.

“MERA sets the maximum selling prices of fuel products and requires premiums that are competitive as provided in the Energy Laws. Importers who insist on premiums which are not competitive will cause pump prices to go up to unsustainable levels, this is MERA’s headache.

“MERA does not use the Price Stabilisation Fund [PSF] to compensate what can be seen as “reckless malpractices” and MERA vehemently reminds NOCMA of previously disallowed claims from the PSF,” said Mulotwa.

There are concerns that the intervention by NOCMA through the Parliamentary Committee is seen as a violation of both the Energy Regulation Act and the Liquid Fuels and Gas Act.

Meanwhile, Mulotwa has urged NOCMA to publish cost of oil in the intention to award contract notice as per the spirit of law to enable bidders that failed to make it and citizens transparently see to inform their next steps such as challenging the awarding of the contracts.

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