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Petroda Malawi Limited has not been remitting public funds in form of levies collected from fuel sales totalling K80 million to the Petroleum Control Commission (PCC). The money has been accumulated over the past two years.
PCC general manager Ishmael Chioko confirmed in an interview on Monday that Petroda has, as of that day, only paid about K4 million of the total amount due in levies.
“Yes, the cumulative figure is in the region of K80 million,” he said in response to a question.
There are several levies in the petroleum price build-up designed to benefit the public and they include K7.70 per litre of petrol, K0.35 per litre as PCC levy, Malawi Bureau of Standards cess levy of 35 tambala per litre, price stabilisation levy of K1.69 per litre and three safety net levies.
Petroleum industry sources said last week Petroda’s evasion was uncovered last year after PCC auditors, Delloite, verified accounts of the Petroleum Importers Limited (PIL), a consortium of private fuel companies.
The sources said the audit discovered that PIL’s claim of a loss of about K400 million, which was later verified to be around K200 million, did not tally with the estimated total collections from levies based on the quantity of fuel imported into the country as provided by the Malawi Revenue Authority.
When queried on the shortfall, PIL, according to the sources, produced documentation showing quantities imported and sold to private companies namely BP Malawi, Mobil Oil, Total Malawi and Caltex.
“PIL said that one of its members, Petroda, was not buying fuel through the consortium and these details tallied with the shortfall in both the number of litres imported and levies collected,” said the source.
Following this development, the Petroleum Pricing Committee (PPC) wrote the Ministry of Energy and Mining to intervene and compel Petroda to pay.
But, according to the sources, PCC cannot stop Petroda from importing fuel because the current law does not provide for licences.
They said the new energy law, which will among other things merge PCC and the National Electricity Council to form the Malawi Energy Regulatory Authority, will introduce import licences which could be revoked when an operator flouts laws.
Sources said Petroda submitted a loss claim of K63 million to be compensated from the Price Stabilisation Fund which is raised through a price stabilisation levy on fuel designed to cushion importers in times of international price fluctuations.
Petroda’s claim is yet to be assessed by PCC auditors because its accounts were submitted only on Monday last week, a day before the PPC held its monthly meeting on petroleum price trends, according to the sources who said the issue of accounts was, however, not raised.
The sources said PPC members at one time almost decided that each of the beneficiaries of the levies should separately claim their dues from Petroda.
Chioko confirmed that Petroda has reported losses in import costs of fuel because prices on the local market have not been reviewed and said the case is yet to be assessed.
Petroda general manager Fuad Mubarak, in the company of his managing director Muhammad Nahdi, on Tuesday confirmed having laid a claim for compensation to cover import losses but denied accumulating unpaid levies.
“We are paying levies but it’s PCC which owes us millions in loss claims,” said Mubarak.
Petroda’s K80 million fuel levies remittance evasion comes against a background of civil society organisations asking for the removal of some of the levies amid accusations that government lacks transparency in their usage.
In their joint inquiry on the levies, Economics Association of Malawi, Malawi Confederation of Chambers of Commerce and Industry, Society of Accountants in Malawi, Malawi Economic Justice Network and Civil Society Agriculture Network recommended that safety net levies be removed because they had become a tax-burden on the people.
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