Forex deficit hinders fuel imports – Mataka

National Oil Company of Malawi (NOCMA) Chief Executive Officer, Engineer Emmanuel Mataka, says foreign exchange shortages are hindering the importation of fuel, contributing to long queues at filling stations across the country.

Mataka said this on Tuesday when he and his management team appeared before the Parliamentary Committees on Budget and Finance in Lilongwe.

He explained that Malawi continues to face a gap between the foreign exchange it generates and the amount required to meet the country’s import needs, including fuel.

“There is a perpetual gap, and that gap can only be breached if, as a country, we increase production. I did give an example of perhaps upscaling the mining sector production so that the country can earn the much-needed forex,” Mataka said.

On fuel availability, Mataka said NOCMA had imported about six million litres of fuel through the ports of Tanga and Dar es Salaam in Tanzania, while more than three million litres of petrol and diesel had been imported through Beira Port in Mozambique and were currently in transit.

He said the fuel situation at filling stations was expected to improve within four days as NOCMA continues managing supplies.

Mataka noted that fuel imports require payment in United States dollars or euros, currencies that remain in short supply in Malawi.

He said the country must increase production, particularly in agriculture and mining, to generate more foreign exchange and reduce pressure on fuel imports.

Mataka also attributed some fuel supply challenges to developments in neighbouring countries.

“At the moment as we speak, there is a civil strike in Tanzania. Although we have ordered six million litres, movement of the vehicles has been limited by volatilities in that country,” he said.

He further said Malawi’s strategic fuel reserves were currently inadequate, pointing to disruptions in global fuel markets, including the ongoing conflict in the Middle East, as evidence of the need for stronger reserves.

Mataka described the forex shortage as temporary and said the situation would improve as the country increases production for export.

“We cannot wait until that time to load the strategic reserve. We need to load it now, and we fill them anytime the available money becomes available and the forex shortage eases,” he said.

Meanwhile, Parliamentary Committee on Budget and Finance Chairperson Sosten Gwengwe said the committee was pleased that NOCMA was recording profits and declaring dividends to government.

However, Gwengwe warned that the company’s financial position needed close attention.

“Our advice to NOCMA colleagues was that they should look at their balance sheet. It doesn’t appear to be very strong as we speak. Actually, their current liabilities are exceeding the current assets by a lot more,” Gwengwe said.

He also questioned plans to expand NOCMA’s fuel storage capacity at a time when the country is struggling to secure adequate fuel supplies.

Gwengwe argued that the expansion would require the importation of construction materials, further increasing demand for scarce foreign exchange.

He said available forex should instead be prioritised for fuel imports until the current shortage is addressed.

Gwengwe stressed that Malawi’s balance of payments had deteriorated due to high levels of imports and called for increased investment in sectors capable of generating foreign exchange.

He said investment in mining was particularly important, warning that failure to address the forex shortage would continue affecting fuel supplies and other sectors of the economy.