The board of Arab Bank for Economic Development in Africa (Badea) has approved a $50 million fuel financing revolving facility for the National Oil Company of Malawi (Nocma).
Both Finance Minister Sosten Gwengwe and Nocma Deputy Chief Executive Officer Hellen Buluma confirmed the development in separate interviews Thursday.
“This is the facility the President [Lazarus Chakwera] referred to before he left for New York [the United States] and today the Badea board approved the facility to Nocma so that it can access it,” Gwengwe said.
On her part, Buluma said Nocma will use the first tranche of $50 million for the immediate procurement of petroleum products to replenish strategic fuel reserves stocks once all the relevant paperwork is finalised.
She said Nocma will be fully responsible for directly servicing the facility.
“I can confirm that this fuel financing facility agreement is between Nocma and Badea, with the Government of Malawi as a guarantor through the Ministry of Finance,” Buluma said.
According to Buluma, the new facility will allow Nocma to channel some of the financing sourced from local banks towards addressing the problem of fuel shortage in the country.
She explained that about $28 million will go directly towards daily fuel requirements, as the company works on addressing the problem of fuel supply shortage being experienced in the country.
Buluma said operations towards normalising fuel supplies are underway.
“High volumes of petroleum products are entering the country on a daily basis, which has seen reduced queues at filling stations across the country,” she said.
On Saturday, privately-run Petroleum Importers Limited (PIL) said the country needs $80 million (K82.48 billion) to normalise fuel supply.
PIL General Manager Martin Msimuko told a joint Parliamentary Committee on Trade, Transport and Natural Resources that shortage of forex and the recent devaluation of the local currency are among factors affecting fuel supply.