Malawi close to fuel solution—Goodall

Malawi Government is getting close to finding a lasting solution to the erratic fuel supply in the country, Natural Resources, Energy and Environment Minister Goodall Gondwe has disclosed.

In an exclusive interview at the weekend, Gondwe said government is in the process of adopting the Zimbabwean model—whereby multi-national oil companies such as Puma Energy and Total are allowed to import fuel directly using their offshore accounts.

Said Gondwe: “We are nearer to finding a solution to the fuel problem…We are adopting the Zimbabwean model where we are involving our big oil companies…”

Puma Energy and Total Malawi Limited were yet to respond to our questionnaire on the issue as we went to press.

But Gondwe sounded confident that this is the only way Malawi can manage to bring in fuel and sustain demand in the current environment.

Fuel shortages, dating back to 2008 but became more pronounced in late 2009, have reduced production in industries and seen many people lose jobs as companies cut their costs to survive.

Malawi needs about $300 million (about K50.1 billion) annually to meet its fuel imports, a daunting task for an economy that relies on tobacco whose earnings have been dwindling. Shrinking support from Western donors, who have withheld their budgetary support to Malawi due to governance concerns, has also worsened the country’s foreign reserves’ position.

The result has been rising social tension, which last July led to unprecedented nationwide demonstrations in which 20 people were killed in a crackdown by security forces.

Economic commentators also fear that if the forex crunch continues, more basic commodities such as bread will become expensive because Malawi imports wheat at an estimated annual bill of $80 million (about K1.3 billion), which government can no longer afford.