The Chair of Natural Resources and Climate Change Committee of Parliament, Honorable Werani Chilenga is under fire after sources within the Petroleum Importers Limited (a joint venture of Petroda, Puma Energy Malawi, Engen Malawi and Total Malawi) have tipped this publication of an underhand deal between Chilenga and PIL, where the PIL instructed Chilenga to use his official capacity to compromise Government’s stake in fuel management.
Following PIL’s agreement to Government’s National Oil Company of Malawi (NOCMA) proposal to be importing 50 percent of fuel in the country, with PIL importing the other half, Chilenga is on record to have labeled the 50-50 arrangement an ‘illegal decision’. Chilenga claims by importing fuel, NOCMA will be overstepping its mandate, which is to store fuel and sell it to the industry.
An internal source at PIL, who chose to remain anonymous, has revealed that the consortium of multinational fuel companies intends to push away government in the fuel importation stake to preserve its monopoly in fuel imports and has palm-oiled Chilenga to use Malawi Parliament towards that end. The PIL source has revealed that the multinational is constructing a house for Hon. Chilenga in Area 25 and has dug boreholes in his Chitipa constituency as a token of appreciation for his role in safeguarding their monopoly in fuel imports. PIL is set to do the same for any other MPs that rally behind Hon Chilenga over the matter in Parliament.
In Malawi, fuel is regulated by the Liquid Fuels and Gas (production and supply) Act, Cap 50:03 of the Laws of Malawi. The Act provides for the production, blending, extraction, conversion, importing, transforming, transporting, storing, distributing and selling of liquid fuels and gas in a liberalised market. Among others, the objectives of the Act include ensuring that the liquid fuels and gas supply in Malawi are adequate, reliable, efficient and economical for the country and the consumers and eliminate discrimination or preferential treatment of any participant, and prevent monopolistic control of any segment of the chain of supply.
Chilenga Abaiting a Monopoly
In Malawi, the importation, wholesaling and retailing of fuels has the same players directly or indirectly involved in the supply chain. Foreign multinational companies that form PIL own over 80 percent of distribution and retail network of oil in the country, practically, the whole oil value chain from importing to retailing is owned by the same foreign companies.
Despite all these economies of scale, PIL, which is bankrolling Chilenga, does not have any reserves of its own; this is a very high risk for the economy bearing in mind that Malawi’s monthly fuel demand is 26 million litres while the total storage capacity of all the oil marketing companies is 21 million litres and can last 15 days at most in case of any shock that would disrupt the importation of fuel. A landlocked country like Malawi should at any one time have a 90-day fuel stock as strategic reserves.
The primary role of government should not only be to address the cost implications of fuel but also the security of supply of fuel into the country in case of any shocks. The current arrangement as defended by Chilenga is very high risk and detrimental to the economy and consumers, and it puts pressure on the exchange rate, yet these companies keep on externalising their dividends. Chilenga’s collusion with PIL is therefore a betrayal to poor Malawians and a plot to rip them off of their hard earned money through unpredictable pump prices and also exposing the country’s economy to shocks.