President Lazarus Chakwera last night moved to tackle the twin crises of fuel and food shortages currently crippling Malawi, announcing a radical shift in oil procurement and assuring the hungry that “help is on its way”.
In a televised address from Kamuzu Palace in Lilongwe, the President said the current open tendering process of procuring fuel is at the moment not suited for Malawi because of the country’s inability to generate the foreign currency needed for National Oil Company of Malawi (Nocma) and Petroleum Importers Limited (PIL) to pay international private sector suppliers.
Malawi needs $600 million annually to bring in fuel, but generates just around $1 billion in forex every year. In total, the country needs $3 billion to meet its import requirements.
The President said his administration will, therefore, s t r i ke g o v e r n m e n t – t o – government (G-to-G) fuel deals with more flexible payment arrangements to avert perennial fuel stock-outs, which worsened in the past six weeks.
“The challenge that Nocma and PIL face to access forex from the market in the Open Tender System we use as a country to import fuel has resulted in fuel supply disruptions at different times in the past 20 years. And it is time for us to take a different approach.
“For this reason, my administration has decided to begin the process of transitioning Malawi from the Open Tender System for procuring fuel to a Government-to-Government arrangement that will make our access to fuel more secure through better payment terms and cycles,” said the President.
Chakwera did not provide details of how such arrangements can be structured within the current legal and regulatory framework governing the country’s public procurement.
Section 37 of the Public Procurement and Disposal of Assets Act prescribes open tender as the preferred method, although it provides exceptions to use other methods such as restricted tendering and single sourcing.
But the President appears determined to make his new approach work, announcing at the same podium that next week he will travel to Abu Dhabi, United Arab Emirates (UAE) to start discussions with the oil rich Gulf country.
“As a first step in pursuing this, I have accepted an invitation from the President of the [UAE] to visit him in Abu Dhabi next week, at his own government’s expense, to discuss this and other matters for the long-term fuel security of our country. My officials will, therefore, give you more details on this as we make progress,” he said.
Moreover, The Nation has learnt that government has already drafted an Energy Regulation Amendment Bill to facilitate this transition into G-to-G fuel procurement arrangements and that Minister of Energy Ibrahim Matola could table the amended draft in the current sitting of Parliament that has gathered for the Mid-Year Budget Review Meeting.
Chakwera also said he constituted a coordinating committee three weeks ago to facilitate and execute all aspects of this G-to-G policy chaired by the Minister of Energy, which also has ministers of Finance, Trade and Industry, Justice and Foreign Affairs as members.
Other members are the Cabinet Secretary, the Governor of the Reserve Bank, the Attorney General, Public Procurement and Disposal of Assets Authority, director-general and chief executive officers of Nocma and Malawi Energy Regulatory Authority with instructions to work with speed to secure the first G-to-G agreements.
A source familiar with such deals confided last evening that the arrangement means importing directly from oil producing companies or refineries, including State-controlled ones, under better terms such as extended credit facility and better prices.
The source said the deal will in the meantime be facilitated under the Government of Kenya arrangement by importing directly from Aramco in Saudi Arabia, Abu Dhabi National Oil Company and Emirates National Oil while processing Malawi’s own facility.
In the address, the President also dwelt at length on the government’s efforts to contain hunger following declaration of a State of Disaster in 23 of the 28 districts eight months ago.
He said government has been able to mobilise a significant amount of resources from the targeted K350 billion to support 5.7 million Malawians currently facing hunger. He aid out of this figure government is now short of K87 billion after development partners responded favourably to his call.
But the President took a swipe at his critics for faulting his frequent foreign travels, saying all the support outlined came from such trips.
He said: “I also knew that being criticised was a price worth paying to find the necessary international support to prevent the far more terrible calamity of 5.7 million Malawians dying of hunger.”
But while the address was anticipated to make a strong statement against incidents of political violence in the country, the President addressed the matter in passing as a last item. He condemned the alleged killing of a party supporter in Blantyre and also joined calls from former presidents Bakili Muluzi, Joyce Banda and Peter Mutharika in condemning political violence.
The three issued a statement after some panga wielding youths in Lilongwe, in full view of police, stopped demonstrations organised by opposition political parties and civil society organisations in the past fortnight.
In his address, the President asked the police to act on the matter.
Reacting to the address, Centre for Social Accountability and Transparency executive director Willy Kambwandira said it appeared the President wanted to use the opportunity to encourage voters to register and not to provide concrete solutions to challenges facing Malawi.
This is the first time President Chakwera has made such a national address since June when he announced the military plane crash in Viphya Plantation which killed Vice-President Saulos Chilima and eight others.
