Malawi needs $730 million for fuel
By Cathy Maulidi:
Reserve Bank of Malawi (RBM) Director of Financial Markets, Chakudza Linje, Thursday told the Natural Resources and Climate Change Committee of Parliament that Malawi’s foreign exchange position remains precarious.
Officials from RBM, National Oil Company of Malawi (Nocma) and Petroleum Importers Limited (PIL), among others, appeared before the committee to answer questions on the fuel situation in the country.
“We continue to face a lot of demand from many strategic imports. Between January and May this year, the Reserve Bank has supported fuel with around $114 million with the commercial banks coming in with $66.5 million.
“From the position that we are sitting, this is quite a huge chunk of foreign currency bearing in mind that as [RBM], we also have to take consideration of fertiliser and medicinal imports which are regarded strategic,” Linje said.
She, however, indicated that there is some hope from the tobacco sales which have so far realised $100 million whose 30 percent has gone to the Central Bank.
“Nonetheless, this is not enough to cushion the country as demand is still high, but whatever the case, [RBM] is ready to support the importation of fuel and other strategic commodities,” Linje said.
During the meeting, Nocma Director of Operations Micklas Reuben disclosed that the State-owned company needs $460 million to import fuel for the next 12 months.
On the other hand, PIL needs $270 million for the same business. This means the two importers require a total of $730 million to bring into the country the strategic commodity.
Reuben said the money that Nocma needs will be able to buy 460 million litres of fuel while PIL’s will bring 280 million litres.
According to Reuben, Nocma wants the fuel situation in the country to stabilise and that people should be able to get the commodity any time.
“It is our wish that we should meet the target but this is subject to availability of forex and, at the moment, we have gone into additional arrangements with commercial banks to make sure that we diversify our access to forex,” he said.
He also told the committee that Nocma has been able to clear a $37 million loan it had with Carmel Oil, but is yet to pay another company called Addax, which it owes $14.8 million.
PIL General Manager Martin Msimuko also said the importers’ fulfilment of their plans to import the 280 million litres of fuel in 12 months will depend on forex availability.
Msimuko said PIL owes fuel suppliers $13 million and that since the bill is due for repayment, they are facing challenges accessing more open credits.
“We need on average of $22 million monthly to support the importation and ensure security of supply,” Msimuko said.
Chairperson for the Natural Resources Committee of Parliament, Werani Chilenga, suggested that stakeholders should come together and produce tangible solutions to forex shortage.
Malawi Energy Regulatory Authority has said the country has petrol to last for one week while PIL says five million litres of petrol and another five million litres of diesel are on their way to Malawi.