Finance Minister Sosten Gwengwe says government has secured a $50 million line of credit from Arab Bank for Economic Development in Africa (Badea) for fuel imports.

Speaking in an interview yesterday, he said the facility will help the National Oil Company (Nocma) to solve fuel shortages in Malawi.

He said:  “Local banks are experiencing foreign exchange shortages. So, the line of credit will assist them.”

Nocma deputy chief executive officer Hellen Buluma yesterday said the facility is a major boost to ensuring steady supply of fuel in the country.

She said: “Once all the relevant paperwork is finalised, Nocma will use the first tranche of $50 million towards immediate procurement of fuel products towards replenishment of the strategic fuel reserves stocks.”

She said the line of credit will also allow Nocma to channel $28 million sourced from local banks to go directly towards daily national fuel requirements.

“Let me add that the operations towards restoring the fuel supply situation in the country are already ongoing with huge volumes of fuel products entering the country on a daily basis,” she said.

However, Buluma explained that the fuel financing facility agreement is between Nocma and Badea with government as a guarantor.

Gwengwe: The facility will help Nocma to solve fuel shortage

She said this means Nocma will be fully responsible for directly servicing the facility.

The Nocma acting CEO recently told the Parliamentary Committee on Industry and Trade that government’s delays to seal an International Monetary Fund Extended Credit Facility crippled a $75 million fuel financing facility with Trade Development Bank (TDB).

The TDB facility, which is under Reserve Bank of Malawi, has been instrumental for fuel importation through letters of credit, which RBM settles after 90 days.

Nocma requires at least $83 million of forex a month to import fuel. However, they have been accessing about 28 percent of the requirements.

The situation has for the past weeks led the country experiencing fuel shortages. The shortage has heavily affected industries, households and the transport sector.

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