National Oil Company of Malawi

The National Oil Company of Malawi (NOCMA) was established in 2010 under the Companies Act of 1984 and its Mandate is to manage a strategic fuel reserve facility in accordance with Government’s approved Strategic Fuel Reserve Management Plan; provide, at a fee, hospitality to new entrants as one way of promoting competition and promote upstream oil and gas exploration.

In order to effectively execute its mandate, NOCMA initiated several reforms under the Malawi Public Sector Reforms Programme that was launched by His Excellency President Professor Arthur Peter Mutharika in February 2015. The reforms undertaken by NOCMA include the following:

Develop Strategic Fuel Reserves (SFR) Regulations
This reform was initiated to help bring security and stability to fuel supplies. The SFR Regulations were developed and were gazetted by Government on 12th June, 2018. The regulations stipulate that NOCMA should be the manager of the Strategic Fuel Reserves; SFRs should have a holding capacity of 60 days of continuous consumption without replenishment; All wholesale license holders to purchase from SFRs at least once every month as per MERA’s guidance; NOCMA to replenish stocks after 30 days; SFRs to be financed through a liquid fuels levy in the price build up deter-mined by MERA, and Government to finance initial stocks in the SFRs.

This reform played a vital role in averting a potential fuel crisis in the country following the closure of the Port of Beira caused by Cyclone Idai, recently.

Amendment of the Liquid Fuels and Gas (Supply and Production) Regulations
This reform was undertaken to link importation of fuel to available and proven storage facilities that any business entity desiring to venture into the fuel importation business has. Government gazetted the amended Liquid Fuel and Gas (Product and Supply) Regulations On 15th September, 2017 and through the reform, NOCMA expects to be given a 77% fuel importation quota of the national fuel demand.

Develop SFR Financing Model
This reform was initiated to ensure that NOCMA does not operate at a loss since the initial fuel pricing concept was based on the model of importation where an importer distributes products to its customers and the cost of operating SFRs was not factored into the petroleum price build-up.

Through this reform, NOCMA is lobbying Government to introduce a SFR Levy to cover the stocking of the SFRs and to cover their operational and management costs without impacting the pump price.

Promotion of Competition in the Oil and Gas Industry
This reform was undertaken to level the playing field and enhance competition in the fuel industry perceived to be highly protected by the long time traditional players. Since its inception NOCMA has been importing fuel and supplying it to Oil Marketing Companies (OMCs) through Petroleum Importer Limited (PIL).

Through this reform, NOCMA has opened access to its products to OMCs outside the PIL consortium and independent fuel retail business operators. As at September 2018, NOCMA’s customer base had increased to 11. Furthermore NOCMA signed four hospitality agreements with fuel importers to utilise idle assets in Chilumba, Chipoka and Mchinji depots.

Support SFRs Ancillary Projects
This reform was initiated to establish projects that will ensure that the SFR achieve their intended goals. Through the storage levy, NOCMA initiated a number of projects to support the SFRs which include access roads, brick wall fences, additional oil water separator pits, fall arrest systems and installation of a rail way line at the SFRs in Lilongwe and Blantyre.

A consultant to design the loading and offloading facility for the rail siding was also engaged. Looking at the reforms being undertaken and progress made, NOCMA is doing a commendable job in implementing its reforms.

Feedback:opcreforms@gmail.com