President Peter Mutharika says time has come for government to take full control of fuel management and imports into the country to achieve a win-win situation.
The President spoke this in Area 25, Lilongwe, yesterday when he officially commission the strategic fuel reserves managed by the National Oil Company of Malawi (Nocma), a State-owned entity. The reserves will guarantee the country two months of fuel reserves unlike the current situation of about five days.
He said Malawi suffered acute fuel shortages between 2010 and 2012 because of poor control of fuel imports; hence, he does not want a repeat that.
Said the President: “The strategic fuel reserves we have seen today tell us that government must think of more strategic control over fuel. It [fuel] is the life blood of the country. Our goal is that we must keep fuel in this country to avoid what happened in 2010.”
However, the 2010 to 2012 fuel crisis in the country is also widely attributed to a shortage of foreign exchange and the country’s poor credit rating at the time, which saw suppliers demanding upfront payment instead of letters of credit to supply fuel.
The President said Malawi was the only country where government does not have full control of fuel imports and management in the region.
Currently, a private sector oil companies consortium, Petroleum Importers Limited (PIL) imports the bulk of the country’s fuel. Nocma imports about 40 percent.
PIL moved in after the then State-owned Petroleum Control Commission (PCC) closed shop after struggling to operate efficiently.
In his remarks, the President also warned against unregulated construction of filling stations in the country, saying: “The economy is growing, so are new filling stations that are coming. However, let me warn against careless construction of filling stations.”
He also cautioned against mismanagement or corruption in the management of the fuel reserves.
Nocma is wholly owned by the Government of Malawi and was registered in 2010 in line with the National Energy Policy.
In the early 1990s, liquid fuel importation was managed by the private sector and oil imports were facilitated on behalf of the Oil Marketing Companies through Petroleum Supply Unit which later stopped because of the floatation of the kwacha that resulted in heavy exchange losses for the oil industry.
In 2003, government, with financial support from the World Bank and United Nations Development Programme, developed the National Energy Policy which recommended the construction of the strategic fuel reserves.
The three fuel reserves were constructed in Blantyre, Lilongwe and Mzuzu with a loan from Exim Bank of India.
In his remarks, Nocma chief executive officer Gift Dulla said the reserves have a storage capacity of 60 million litres.
He said: “The reserves have a combined capacity of 60 million litres of fuel, representing two months of fuel cover for the country at current estimated national daily consumption level. The storage capacity for Lilongwe is 25 million litres, Blantyre 25 million litres and Mzuzu 10 million litres.”
As of December 5 2017, there was 35 million litres of diesel and 9.1 million litres of petrol in all the three depots.
Currently, Nocma brings its fuel into Malawi using the ports of Beira, Dar es Salaam and Nacala.
Minister of Natural Resources, Energy and Mining Aggrey Masi said government is geared to make fuel accessible to everyone as a lot of people have bought cars and some are still buying. n