Malawi Government says it has secured a $50 million (about K52 billion) loan from the Arab Bank for Economic Development in Africa (Badea) for restocking the country’s fuel reserves to ease recurring fuel supply challenges.
Minister of Information and Digitisation Moses Kunkuyu told a news conference in Lilongwe yesterday that the loan agreement has already been signed, but that the two parties are still discussing technical issues.
The minister, who was accompanied by National Oil Company of Malawi (Nocma) chief executive officer Clement Kanyama and his Malawi Energy Regulatory Authority (Mera) counterpart Henry Kachaje, said government has finalised repaying another $50 million loan to Badea which was also used for purchasing fuel.
Said Kunkuyu: “After finishing repaying the previous loan which we also used for fuel imports, we have managed to secure another $50 million loan and we just need to formally agree on terms such as interest rate.”
He also said the loan will help Nocma to fill the country’s fuel reserves by the end of September.
“Through this loan, Nocma will be able to focus on refilling the fuel reserves while the Petroleum Importers Limited (PIL) will be asked to focus on importing for distribution across the country. This way, the fuel shortage problem will have been dealt with effectively,” said Kunkuyu.
He said the consumption of fuel is now at two million litres per day, a situation aggravated by people who overbuy the commodity in anticipation of a scarcity. Under normal circumstances, the daily consuption is pegged at 1.7 million litres.
Taking his turn, Kachaje said the increased demand for fuel prompted the regulator to ban the use of jerry cans in fuel purchases.
He, however, said there are few exceptions to individual businesses such as hotels and companies with licences to buy of fuel in jerry cans.
For the past two years Malawi has been experiencing shortages of fuel attributed to low foreign exchange reserves.