President Chakwera in Abu Dhabi for Government-to-Government fuel transactions
* As Energy Minister Ibrahim Matola is optimistic of sustainable fuel supply following negotiations with United Arab Emirates
* The President’s visit to United Arab Emirates will go a long way in materialising a policy shift in fuel procurement
* However, we are not abandoning the open tender procurement system as we embark on Government-to-Government fuel transactions
By George Bulombola, MANA in Abu Dhabi, United Arab Emirates
Minister of Energy, Ibrahim Matola yesterday said he was optimistic of the resumption of uninterrupted fuel supply in Malawi as it will be normalised following President Lazarus Chakweras visit to Abu Dhabi, United Arab Emirates (UAE) where he is having talks with the country’s oil producing country President, Highness Sheikh Mohammed bin Zayed Al Nahyan.
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In an interview with Malawi News Agency (MANA) Matola said the two leaders are holding bilateral discussions on the supply of petroleum products in Malawi among others.
“The President’s visit to UAE will go a long way in materialising a policy shift in fuel procurement, however, we are not abandoning the open tender procurement system as we embark on Government-to-Government (G-to-G) fuel transactions.
“We are going to engage government agents through this G-to-G fuel supply system as the open tender system has a lot of middlemen in between in the products supply chain.”
The Minister added that the meeting between the two leaders is expected to unlock fuel supply challenges and bypass some of the middlemen who make the lives of many Malawians difficult by their involvement in the supply chain.
“We are going to bypass current challenges from petroleum refineries, vessels and ports and Malawi, being a landlocked country, is a victim of a long supply chain in which various players come with additional costs thereby making fuel expensive price.
“It is about 1,700kms from Dar es Salaam to Lilongwe and almost 900km Beira to Blantyre while from Nacala to Malawi is 700km. Such long distances are prone to be abused by middlemen and other players in the system.”
Energy Minister Matola
Matola further said any change in a system comes with challenges but change is inevitable as far as protecting Malawians is concerned, energy being an abler.
“Intermittent supply of fuel has for the past six weeks affected service delivery in various sectors which among others include, health, agriculture and education.
“Therefore, we need to do the right thing to address the fuel supply system as both fuel and electric energy is a cross-cutting abler in development,” Matola said.
The G-to-G fuel transactions are expected to lead to long-term sustainable fuel supply to Malawi as the system will waive the intervention of agents in the petroleum business.
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On Friday, President Chakwera solicited the support of the UAE government in the provision of a reliable and sustainable supply of fuel in Malawi and has already engaged Mohamed Hasan Alsuwaidi, Minister of Investment and Group Chief Executive Officer of Abu Dhabi Holdings.
President Chakwera stressed the importance of partnerships with UAE-based fuel companies to ensure consistent petroleum supplies.
“Malawi seeks to strengthen negotiations with fuel companies in the UAE to secure a steady and reliable petroleum supply while advocating for the establishment of fuel refineries within our borders to enhance energy security and drive local economic growth,” said the President.
He also said his administration will be submitting a comprehensive investor pack to ADQ, one of the largest holding companies in the UAE, outlining bankable projects aimed at transforming Malawi’s economy.
Among the proposed projects, the President mentioned the establishment of a digital investment bank, logistics and mobility ventures to improve the country’s road and railway networks and investments in key government companies.
“The Government of Malawi is determined to pursue partnerships that deliver tangible progress for our nation,” he said. “We are confident that ADQ, with its extensive global experience and resources, will see the immense potential of these projects to not only deliver financial returns but also uplift millions of Malawians by enhancing infrastructure and creating jobs.”
The President expressed optimism that the submission would receive a positive response from ADQ, noting the strategic importance of these projects in unlocking Malawi’s economic potential.
He also said the proposed projects are part of Malawi’s broader strategy to attract high-impact investments that align with the government’s 2063 vision for economic transformation.
The UAE Minister of Investment and Group Chief Executive Officer of Abu Dhabi Holdings expressed interest in exploring these proposals, signaling potential collaborations that could transform Malawi’s energy landscape.
Meanwhile, Chakwera on Friday urged various investors in UAE to invest in Malawi in various sectors including agriculture tourism and mining (ATM) strategy.
Rail haulage the cheaper way of transporting fuel
Before traveling to UAE, the President had constituted a Coordinating Committee headed by Energy Minister Matola aimed at facilitating and executing all aspects of G-to-G fuel procurement arrangement.
He gave what he described as “strict instructions to work with speed to secure the first of G-to-G arrangement” and through various strides the Coordinating Committee achieved, the President was invited by UAE at its own expense, to discuss G-to-G arrangement and other matters for the long-term fuel security.
He announced this in his address to the nation on November 27 to report on the actions that he has been taking to address three serious challenges being faced as a country, one being the six-week long dry pumps at filling stations.
He reported that the scarcity of fuel at pump stations was due to a 10-day fuel imports suspension, saying: “As a nation, our monthly fuel demand is at an average of US$50 million per month, which is used by our two main fuel importers, namely the National Oil Company of Malawi (NOCMA) and Petroleum Importers Limited (PIL).
“Unfortunately, through no fault of their own, the rate at which we as a country generate foreign exchange has not kept pace with the growing demand for fuel, making these two importers unable to raise enough forex from the market to import the required volumes of fuel.
“For instance, in the month of August, NOCMA only raised US$23 million of the required forex, while in September and October, that number fell below US$20 million — increasing NOCMA’s debt to suppliers to US$72 million in October and resulting in a 10-day suspension in NOCMA’s access to fuel imports.”
He added that these challenges led to the 10-day suspension that created the fuel queues over the six weeks, and at the very start of the crisis he instructed the Treasury to contact development partners at BADEA, who responded by providing a US$50 million revolving credit facility.
He also engaged the Reserve Bank “to ramp up efforts to access more foreign exchange through commercial banks, and it is these interventions that have enabled NOCMA and PIL to bring the fuel that is now being made available in the filling stations”.
The fuel crisis
He reported that the availability of fuel is only a short term solution, saying: “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,” he said, while announcing that his administration has embarked on the process of transitioning Malawi from the Open Tender System for procuring fuel to a G-to-G arrangement “that will make our access to fuel more secure through better payment terms and cycles”.
He further announced that as of three weeks before, he constituted the Coordinating Committee to facilitate and execute all aspects of this G-to-G policy, chaired by Minister Matola that include Ministers of Finance, Trade & Industry, Justice, Foreign Affairs, Cabinet Secretary, the Governor of the Reserve Bank, the Attorney General, the Director General of the Procurement Authority, and the chief executive officers of NOCMA and Malawi Energy Regulatory Authority (MERA).—Additional reporting by Duncan Mlanjira, Maravi Express
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