Truck accident along Chileka-Magalasi Road exposes cooking oil smuggling

A truck with Mozambican registration number was involved in an accident on Friday near Magalasi on the road to Chileka in Blantyre and as the owners were transferring its goods to another truck on Tuesday, it was exposed to have been carrying alleged smuggled cooking oil from Mozambique.

A source, who shared pictures of the truck and its contents in 20litre containers, said the truck was in transit from Mulanje border to Mwanza border and was originally covered with a tarpaulin.

When Nyasa Times alerted Malawi Revenue Authority (MRA) Head of Corporate Affairs, Steven Kapoloma he responded that he has taken note and his office would rush to the scene to investigate.

Recently the issue of smuggled cooking oil from Mozambique took centre stage when Malawian manufacturers of the commodity were crying foul that smuggled oil is affecting their business because their prices are higher because of the reintroduction of 16.5% valued added tax (VAT) to the commodity.

The Malawian manufacturers contend that Mozambicans have an advantage in that most of their factories are in Beira — the source where crude oil lands and from where Malawians transport it to their bases.

Because of that transportation cost, coupled with the global price of crude oil and the reintroduction of 16.5% VAT — Malawi’s market price went up thus low encouraged smugglers to be exporting the cheaper oil from Mozambique.

However, at a press conference that MRA and Consumer Association of Malawi (CAMA) disagreed with Malawian cooking oil manufacturers’ that VAT or even smuggled oil should be attributed increase in cooking oil.

Kapoloma had said at the press conference that their fight against smuggling of any commodity is their top priority and that they have dedicated patrol units that are plying along the borders of Mozambique operating from Muloza in Mulanje.

Kapoloma also said since they intensified the patrols, they have intercepted lots of smugglers and confiscated many tonnes of cooking oil and would maintain their vigilance to protect the Malawian economic industries.

In a separate interview with Nyasa Times a few days later, the cooking oil manufacturers, through public relations manager for Capital Oil Refining Industries Limited (CORI), Violet Kapolo took cognizance that the increase in price of the commodity is due to global trends on crude oil but maintained that Malawi’s prices went further up following the re-introduction of VAT.

Kapolo said they had to increase the price of the commodity when the global prices for the crude oil they import went up and keeps fluctuating and that this is the same trend in Mozambique, whose prices were the same as with that in Malawi but with the introduction of VAT it means the prices had to go further up.

She had said Mozambique does not demand VAT on cooking oil and when traders learnt of lower prices there as opposed to Malawi’s, they started smuggling in the oil from Beira.

She also said what is contributing to this trends in unfair trade practices is not about the bottle-packaged products sold through retailers such as Sana or Shoprite, Chipiku, People’s and other grocery shops but the bulk selling in 20litre buckets.

“This is where we sell most — in bulk of 20litre buckets. Before VAT was re-introduced, traders weren’t bringing in smuggled oil because the prices were the same with that of Mozambique, so it didn’t make business sense to import.

“But when we had to factor in VAT, it gave leeway for smugglers to make huge profits from the imported cooking oil and thus consumers opted to buy the smuggled product.”

She disclosed that CORI was producing the commodity enmasse and they could sell up to 5,000 buckets a day but now they are selling less than 500 a day.

“We worked in shifts in order to meet the huge demand but now, the machines are idle, the staff are idle, which might lead to job losses but we are reluctant to execute for the moment hoping the authorities would protect us from the smuggling trade that is killing us.

“For that to happen, the government needs to revisit the VAT system because this is what has affected our industry. There is need to enforce this smuggling,” Kapolo said.

When contacted, CAMA Executive Director John Kapito disclosed that according to the law under Malawi Bureau of Standards, Malawian cooking oil are not supposed to sale at wholesale the commodity in 20ltr buckets.

“What the manufacturers should know is that the authorities will be confiscating any product found in 20ltr buckets being sold on retail, which is called decanting.

“Decanting is not allowed by law on health and sanitation grounds and if the manufacturers are found distributing such cooking oil in bulk as they claim, then what they are doing is against the law.

“The manufacturers can only supply in bulk to hospitality industry — hotels and restaurants and not to retail sellers and once found the law will take its course,” Kapito said.

He maintained that the authorities will be confiscating all cooking oil in bulk whether locally manufactured or smuggled in like the goods found on the truck that was involved in the accident at Magalasi.

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