Shortage of forex, Devaluation behind Fuel crisis

By Antony Isaiah Jr

The Energy sector has spotted Shortage of forex, Devaluation of Malawi Kwacha and Destruction of the Kapichira Hydro-power Station to be the causes of the current Energy Crisis.

The Malawi Energy Regulatory Authority announced the slashing of the Petrol Price but it has been noted but it has noted that for the past three weeks the country has been experiencing fuel scarcity which has in turn affected lives and businesses.

Speaking at the joint committee of Parliament, transport and natural resources in Lilongwe, National Oil Company cheif executive officer, Helen Buluma said the country has billions of Kwachas to fuel imports but the company is failing to access forex to buy the fuel.

“As National Oil Company, we have been angering suppliers to supply fuel and get their payment after securing the forex because as of now, we have billions of Kwachas to import fuel, Shortage of forex stands on our way.

“In August, suppliers were reluctant to make supplies because the debt was accumulating.

“National Oil Company went to Tanzania to negotiate with suppliers for 10 millionitres of diesel and 10 million litres of petrol and that’s what is being supplied in the country.

“As NOCMA is covering over 85 per cent of fuel on the market and we need over $80 million to fill the fuel reserves in the country,” said Buluma.

Concurring with Buluma, Petroleum Importers Limited General Manager, Martin Msimuko says as Importers are facing a big challenge to have fuel in Malawi as they cannot access enough forex.

“Banks have reduced the amounts of money that they were giving us for Importing fuel, for example, we are receiving $5 million from Standard from the previous $25 million, $5 million from $10 million.

“It’s only Ecobank that has increased their allocations from $30 million to $40 million.

“We have engaged the Reserve Bank of Malawi to help us with the issue of forex and we are also linked to a bank outside the country for a facility of $50 million,” said Msimuko.

On his part, Malawi Energy Regulatory Authority (Mera) cheif executive officer, Henry Kachahr said the country needs over $600 million per year for fuel only but the country only obtains $200 million from Tobacco.

“We have the issue of shortage of forex because we have not doubled our generation of forex to match the demands of the forex that has drastically risen. We need to have conversation on how we can double the forex generation because without doubling our firex generation, all the measures that we can put in place, will just be cosmetics. Borrowing is not a solution and at the end we will still need to pay back and the country will be under pressure,” said Kachaje.

A joint parliamentary committee, comprised of committees on Natural Resources and Climate change , Statutory Corporations, Transport and Trade, Industry and Tourism, called for an emergency meeting with Ministry of Energy, National Oil Company of Malawi (NOCMA), Malawi Energy Regulatory Authority, Petroleum Importers Limited (PIL) and Mount Meru and other stakeholders in fuel sector to discuss fuel challenges that the country is facing.