National Oil Company of Malawi (NOCMA) plans to import 460 million litres of fuel in the next 12 months to stabilise the availability of petroleum products in the country.
The company disclosed this during an interface with the Parliamentary Committee on natural resources and climate change which also had the participation of other stakeholders with the aim of updating the Committee on the status of fuel importation and payments to fuel suppliers on Open Credit.
The meeting was also attended by senior officials from the Reserve Bank of Malawi, Malawi energy regulatory authority (MERA), Petroleum Importers Limited (PIL), Ministries of Energy and Finance.
Director of Operations at NOCMA Micklas Reuben stated that its wish is to meet the targets, however this is subject to availability of forex.
“We do import using the 90 day turner in terms of payment so we import, we sell the product, we collect the money from the customers and the money that belongs to the suppliers is remitted to them. But because the importation is in foreign currency, we do that through the commercial banks so that they can actually turn the money into forex to remit back to the suppliers.
“It’s our wish that we should meet the target in this quarter, but it’s subject to availability of forex and at the moment; we’ve gone into additional arrangements with commercial banks to make sure that we diversify our access to forex and it our hope that in the next coming quarter, we should be able to meet the target of importing a minimum of 31 million litres per month”.
In the current arrangement, 85 percent of volumes will be imported under FCAX Tank and CIF meaning NOCMA is going to take ownership of the product at the port giving it powers to make decisions in terms of who is going to transport.
The major benefit is that 85 percent of volumes will be transported by Malawian transporters which will boost indigenous businesses and will save the usage of forex on fuel importation by 15 percent.
Commenting on the associated risks, he explained that NOCMA will take liability of the risks from the port under CIF and FCAX but will mitigate them by ensuring that there is an insurance cover for any business undertaking.
The company has engaged four suppliers HARPCO, ADAX, Camel Oil and Augusta and from these, it’s only Camel Oil that’s still engaged in discussions with it and was upbeat that before the end of the month the contract will be signed.
Total volumes that will be imported in metric tonnes is 356, 500 which will be based on the premiums that were submitted to them.
Reuben indicated that the issue of payment in Malawi Kwacha is ongoing and will be made clear following the discussions.
From the interactions with stakeholders, Committee Chairperson Werani Chilenga expressed satisfaction with the moves taken by government to ensure that the fuel problem does not continue.
“Yes I can foresee us coming out of this situation because we now have Kapichira back, so most of the factories, most of the companies that were using diesel for their factories will be using electricity. We have the 130 megawatts back; this will ease pressure on consumption of fuel because most of the fuel will mostly be used by vehicles instead of some of it being used by factories in terms of production.
“So yes it’s attainable because we have Kapichira back and I’d urge government or EGENCO or ESCOM to do even more so the Ministry of Energy can bring in more power it means pressure on fuel will go down and we’ll be there by the end of the day”.