Minister of Natural Resources, Energy and Mining Jean Mathanga has emphasised the need for an automatic pricing mechanism to ensure fuel is sold at a cost-reflective price.
The minister made the remarks yesterday during a visit to National Oil Company of Malawi (Nocma) fuel depot at Kanengo in Lilongwe, where she held discussions with officials on a wide range of issues.
Under the proposed mechanism, fuel prices would be revised whenever changes in the landed cost exceed a trigger limit of plus or minus five percent.
Said Mathanga: “We are going back to the drawing board to make sure that the issues of price adjustments are looked at seriously.
“One of the challenges that the nation is facing is that some of our fuels are going out to our neighbouring countries, because I think our prices are lower than prices in neighbouring countries, and as such, we are also eating on our reserves.”
In an earlier interview, Economics Association of Malawi (Ecama) president Bertha Bangara-Chikadza cautioned that the adoption of an automatic pricing mechanism could trigger inflationary pressure and strain household budgets.
But she said aligning domestic pump prices with global market trends could, in the long-term, reduce fiscal pressure and ease demand for scarce foreign exchange.
Said Bangara-Chikadza: “Restoring cost-reflective pricing can help reduce fiscal burdens and ease pressure on foreign exchange reserves by aligning domestic fuel prices with global market trends.
“However, the risk of inflation is a genuine concern. Higher fuel costs tend to ripple through the economy, raising transport and food prices, which can erode household purchasing power and dampen growth.”
The International Monetary Fund (IMF) has consistently argued that delayed fuel price adjustments have built up large fiscal liabilities, indicating that the Price Stabilisation Fund is depleted, resulting in importers being owed in excess of K950 billion as of August this year.
During the Nocma visit, the minister also hinted that government is ready to go back to Parliament to amend the law following a pronouncement by President Peter Mutharika that his administration has abandoned the Government-to-Government (G2G) arrangement.
Said Mathanga: “So, the laws are there, but of course we also go to the policies as a government. So what is to happen is for us to go back to the drawing board and provide the necessary legislation to allow Nocma to operate smoothly.”
In December last year, Parliament amended the Liquid Fuels and Gas (Production and Supply) Act to facilitate the transition from open tender to G2G procurement and give the Minister of Energy the power to nominate an agent or State entity to import fuel without oversight from the Public Procurement and Disposal of Assets Authority.
During the interaction, Nocma chief executive officer Clement Kanyama urged the minister to engage her counterparts in Mozambique to address operational challenges at the Port of Beira, where fuel vessels face waiting times of up to 90 days at a cost of $30 000 per day.
The CEO said improving access to the ports for fuel supply would enhance national fuel security and lower operational costs.
In his presentation, Nocma deputy chief executive officer Reuben Micklas raised an alarm that 47 percent of fuel is being transported by foreign-owned trucks. This, he said, leads to the export of forex through transport costs instead of using it for fuel imports.
He also stated that on October 31 2025, the date of the phasing out of G2G, OQT of Oman had delivered 74 418.6 metric tonnes (96 000 tonnes) from a contract of 300 000MT. Two letters of credit were established to facilitate receiving of two vessels.
Another supplier, Adnoc of EOC, delivered nothing due to Nocma’s failure to establish a letter of credit for the 390 000 tonne contract.
Earlier in the day, Mathanga toured the 50 megawatt (MW) Nanjoka Solar Power Plant in Salima where the Electricity Generation Company (Egenco) chief executive officer Maxon Chitawo disclosed that forex shortages are hampering the company’s efforts to carry out some processes towards the commissioning of the plant.
He said Egenco needs $2.6 million (about K4.5 billion) to hire engineers from China and $1.6 million (about K2.8 billion) for battery storage facility.
“Because of the shortage of forex, we are unable to pay them to come and do the job. If we had paid them, the engineers would have been here testing every line, so that we commission the plant,” said Chitawo.
He said the first phase will install 10MW out of 50MW to the national grid by December 2025.
In response, Mathanga said her ministry will engage the Ministry of Finance for help to ensure Nanjoka Solar Power Plant is completed.
She said: “Government is working hard to make sure that we make the resources available to finish this project. We are working hard to make sure that we get the forex needed so that we are able to pay for these services. We will ask the Ministry of Finance for help.”
The minister commended Egenco for the progress made, noting that the first phase is about to end within schedule to enable its commissioning by December, 2025.
In his remarks, Salima district commissioner James Mwenda said the solar power plant project will not only benefit people in the district, but the entire Malawi population.
The Nanjoka Solar Power Plant, which Chint Electric Co. Ltd started constructing in July 2024, is part of Egenco’s plans to diversify sources of energy and increase power onto the national grid.
The power plant also has a battery energy storage system for storing excess energy to enable reliable power supply even when sunlight is not available.
During a recent media tour, Chitawo said the $13 million (about K22 billion) project is being implemented in three phases, beginning with 10MW followed by 10MW and 30MW in the second and third phases, respectively.
