LILONGWE-(MaraviPost)-Despite the romours making rounds, there has been no contract signed or money paid for fuel supply from the two proposed deals with with G.E.T Global and Sheikh Saud bin Saqr al Qasimi of the UAE, according to the National Oil Company of Malawi (NOCMA) chief executive officer Clement Kanyama.
In an interview, Kanyama outlined all the legal processes that are undertaken when purchasing fuel from a supplier, which were not exhausted in the two deals to warrant upfront payment.
“The on-going infrastructure construction activities do require considerable petroleum products. The reality is that unless an allocation (an average of US$50million, each month) of FOREX to fuel importers is matched with actual consumption, the additional consumption arising from implementation of major projects shall be met.
“With existing fuel importers not securing adequate FOREX to match day to day fuel consumption, the Ministry of Transport and Public Works (MOTPW) secured a fuel supply from a UAE based refinery through an arrangement with GET Global,” said Kanyama who added that since Covid 19 outbreak, Malawi has not managed to generate adequate forex to pay for the critical imports.
He added that through the two deals; “We are benefiting from a situation where all the four suppliers have agreed to waive a contractual requirement. In this, we are required to establish letters of credit with these suppliers, when they supply on open credit and the amounts are due, we are also not able to pay the amounts on the due dates.
“As a result of that, there have been times when the volumes of fuel in the strategic fuel reserves have been depleted, and there have been some instances where we’ve run out of stocks in the retail outright,” he said
He said currently, in line with requirements, MOTPW is processing an importers licence, with MERA and seeking hospitality with NOCMA, where NOCMA shall be an Agent and MOTPW shall be the Principal Hospitality agreement has not been signed.
“Offer from GET Global to Ministry of Transport and Public Works to sell fuel from a refinery is on concessionary terms. Process for signing of hospitality agreement between NOCMA and Ministry of Transport and Public Works – the existence of an importers’ licence shall enable NOCMA to conclude hospitality agreement. NOCMA understands that Ministry of Transport and Public Works is processing/applying for importers license, for submission to MERA.
“NOCMA has advised of terms and conditions applicable to hospitality, between NOCMA and Ministry of Transport and Public Works. This is part of the process of negotiating a hospitality agreement. No financial transactions have taken place on this arrangement, as Hospitality Agreement is not yet assigned.
“Since MOTPW is yet to be issued a licence by MERA and a hospitality agreement is yet to be signed, verification work with entities who are storing the product has not been carried out by NOCMA. This includes, obtaining confirmation on the bank accounts, which will receive payments for onwards processing to the supplier/ refinery,” he said.
Kanyama said NOCMA verification of the product: shall be based on MOTPW having been issued with an importers license and Hospitality agreement, signed between NOCMA and MOTPW.
“Given that MOTPW is part of the Malawi Government, NOCMA shall obtain a Treasury prior approval on use of bank accounts under this Hospitality Agreement – NOCMA can confirm that no financial transactions have taken place between NOCMA and MOTPW under the proposed Hospitality Agreement,” he said
Kanyama said with such a scenario, NOCMA examined the situation and concluded that in addition to engaging local banks to secure increased Forex, they also decided, such as one, where the suppliers are paid in Malawi Kwacha.
However, he said to do that, there is a need to follow the processes, such as open tender, restricted tender and single sourcing.
“Now allow me to indicate that Sheikh Saud bin Saqr al Qasimi who then came up with an offer that they are willing to be paid in Malawi Kwacha. Now, this Malawi kwacha will not be taken to UAE, but shall be used by this office of the sheik in implementing the activities which they intend to implement in Malawi under the MOU.
“So, I can assure you, and I can assure the country that, as NOCMA, we have not seen anything which is suspicious to us. This is a single sourcing of a supplier because there is an advantage, where they are going to pay in Malawi Kwacha,” he said.
Concerning the contract between the Ministry of Transport and Public Works and G.E.T Global which is on concessionary terms, NOCMA CEO said the Ministry of Transport and Public Works is yet to be issued a license by Mera and a hospitality agreement is yet to be signed.
He said this includes verification work with entities storing the product, which he said has also not been carried out by NOCMA, which among others is to obtain confirmation on the bank accounts that will receive payments for onward processing to the supplier.
