Dwindling foreign exchange reserves have stifled fuel imports into the country, forcing some oil marketing companies to ration diesel this week.
Petroleum Importers Limited (PIL) general manager Martin Msimuko in an interview yesterday acknowledged the supply challenges, but said they have engaged commercial banks to help.
He said the banks have since responded positively and he was positive that the consortium will be fully covered to import adequate fuel, including the diesel.
Msimuko said: “We have engaged the banks and they have responded positively. We are fully covered for this month’s imports.”
PIL alongside State-owned National Oil Company of Malawi (Nocma) import fuel into the country. However, in recent months, foreign exchange shortages have been frustrating the process leading to pockets of dry service stations.
This week, petroleum industry sources confided that diesel supplies were under threat such that some companies were rationing supplies in their networks. The sources said the situation was creating panic buying and quickly depleting the available stocks.
From Sunday, most service stations, especially in Blantyre and Lilongwe cities, have been having erratic diesel stocks. Where the fuel is in stock, motorists have been seen queuing to try their luck.
Diesel, now selling at K1 470 per litre from K1 120 following the average 22 percent fuel pump price hike Malawi Energy Regulatory Authority (Mera) effected on Sunday, is a strategic commodity that is used by industry as well as vehicles that transport essential goods.
Blantyre-based minibus driver Fatchi Madani said in an interview yesterday the erratic supplies were negatively affecting their business.
He said: “We have targets to meet and now we are spending a lot of time in filling stations waiting for diesel. We are unable to meet our targets because of the time we spend on queues waiting for the diesel.”
Ishmael Ibrahim, who operates a truck business, said the shortage of fuel is affecting his business and causing them to make losses.
“My trucks were supposed to leave for Beira [in Mozambique] yesterday, but due to diesel shortage, they could not leave. Something needs to be done urgently,” he said.
A manager of one of the oil marketing companies said available stock in some cases is equivalent to what a single filling station delivery when supply is normal, but they are now forced to ration among several stations to avoid long queues.
Nocma public relations manager Chisomo Mwamadi yesterday asked for more time to consult before responding.
The State-owned company is complemented by PIL, a consortium of private sector petroleum marketing companies. Each of the two brings in 50 percent of the country’s required volumes.
The current demand for both diesel and petrol is 1.7 million litres per day, from one million litres in 2015.
When asked how commercial banks are moving in to help on the fuel imports amid the forex shortage, Bankers Association of Malawi chief executive officer Lyness Nkungula said banks are doing their best in supporting the fuel imports just as they are doing with other essential imports such as medicines.
She said: “Banks are trying to help out on all essential imports without marginalising other equally important sectors.”
But when contacted to give the central bank’s position on how it is helping on essential imports such as fuel, Reserve Bank of Malawi (RBM) spokesperson Ralph Tseka said he was in a meeting and asked to be contacted later.
He, however, did not respond to subsequent phone calls.
Malawi’s foreign exchange reserves continue to be under pressure with latest market reports indicating dwindling of gross official and private sector reserves.
The situation has, in turn, continued to strain the exchange rate movement, with the kwacha depreciating to K823.60 against the dollar, according to RBM figures contained in a Bridgepath Capital Report for March 2022.
The data shows that gross official reserves under the direct control of the central bank dropped by 2.83 percent to $374.48 million as at March 31 from $385.40 million in February. On the other hand, private sector reserves also decreased by 3.86 percent to $391.49 million from $407.22 million during the same review period.
The drop in the reserves position, according to market analysts, reflected the increasing burden on the centrqal bank to support the foreign exchange market with liquidity to help either in smoothening the rate of depreciation or payment.