National Oil Company of Malawi (Nocma) Limited and Petroleum Importers Limited (PIL) say they need $740 million (over K740 billion) for fuel imports this financial year.

Representatives of the two fuel importers told the Parliamentary Committee on Natural Resources and Climate Change during a meeting in Lilongwe yesterday that they are targeting to import a combined 740 million litres of fuel for the 12 months starting May 2023.

Some kabaza operators in the fuel queue in Limbe, Blantyre

In his presentation, Nocma director of operations Micklas Reuben told the committee that the State-owned company is targeting to import 460 million litres to ensure fuel availability in the next 12 months.

He said the cost of landing one litre in the country is pegged at about $1, as such, Nocma will require $460 million to import 460 million litres.

Reuben said: “We want to fill the reserve tanks so that there is a 45-day cover to ensure that the country has fuel.

“Currently, Nocma has various forex facilities with local banks amounting to $98 million. The other money is expected to be secured as sales are made.”

He said Nocma has since identified four suppliers to deliver the 460 million litres needed. The companies are Adax, Augusta Energy, Hapco Energy and Camel Oil.

“We have already signed contracts with three of the companies, namely Adax, Augusta Energy and Hapco. We are planning on signing a contract with the fourth supplier before end of May,” said Reuben.

He further explained that Nocma has cleared the $37 million it owed Camel Oil, and is remaining with $14.8 million owed to Adax.

PIL general manager Martin Msimuko said the company plans to import 280 million litres of fuel, but admitted that meeting the target will not be easy for the consortium due to foreign exchange scarcity.

In this regard, he called for support from banks and other stakeholders to ensure security of supplies in the country.

Msimuko said: “That would require us to have about $270 million to buy the same and our monthly requirements are $22 million.

“With the forex shortage, we might not reach that target but we are sure that the banks and all other stakeholders are also interested in not having fuel shortages.

Malawi Energy Regulatory Authority (Mera) chief executive officer Henry Kachaje lamented that forex shortage is a burden to ensuring fuel availability in the country.

He said the country has experienced a drop of about 33 percent in fuel imports due to financing challenges.

“The demand for forex for fuel imports has almost doubled. Last time, I indicated that we have moved from about $300 million to $600 million,” said Kachaje.

On the other hand, Reserve Bank of Malawi (RBM) director of financial markets Chakudza Linje stressed that the forex situation in the country remains precarious.

“Apart from fuel, there are other strategic imports that the country needs to make. The Reserve Bank has been providing forex for fuel and from January to April it provided $114 million,” she said.

Linje said there are hopes that tobacco sales will help improve the forex reserves, but stressed there is need for the country to improve on exports.

Treasury representative at the meeting Daisi Kachingwe Phiri said government is engaging development partners to ensure direct budget support to the country which will help improve the forex situation.

He said government is pushing to have the International Monetary Fund (IMF) Extended Credit Facility approved that would help the country get support from other countries to boost forex levels.

Committee chairperson Werani Chilenga said it is high time the country started maximising on mining exports to boost forex reserves.

“The Reserve Bank of Malawi should engage us as a committee so that we help provide information on how best we can utilize the mining sector to generate more forex,” he said.

Malawi has been reeling under a foreign exchange crisis for the past three years which has resulted in erratic supply of fuel on the market.

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