Why is the Government of Malawi failing to sort out Fuel Shortages ?

A Fuel queue in Malawi

For weeks now Malawians have been experiencing what can only be described as acute and severe fuel shortages, with very long queues outside filling stations, as motorists wait in line for hours for the commodity, amidst multiple reports of malpractice among some owners and employees of some filling stations.

But what is causing these severe fuel shortages? And what is the government doing about them?

To give a bit of a perspective of the size of the problem, please view the Facebook video below (or see this tweet) posted by a member of the public showing him driving past one of the such “nightmare” fuel station queue.

https://m.facebook.com/story.php?story_fbid=pfbid0SYNWbsQMZz6XDw99asRUdN6hCumXgKFcQnbDi89xhA4hb8dynQt4hBzrQrir7kyxl&id=644006266&sfnsn=scwspmo

So what has caused the fuel shortages?

The answer to that question depends on who you ask. The government says that global fuel price rises and a shortage of foreign exchange currency are responsible for the shortfall. But critics say, mismanagement of funds and poor decision making by the National Oil Company of Malawi(NOCMA), and corruption in government (in particular in the awarding of contracts), are the real reasons behind the shortages.

At the UN General Assembly in September Chakwera said that when COVID19 hit the world, Malawi’s exports drastically reduced, causing a Forex shortage. This disruption in exports is what is causing the government to fail to import enough fuel. Chakwera also said that fuel price increases caused by the reduction of supply due to the war in Ukraine meant that Malawi was now paying a lot more for fuel imports than had been the case before.


Lazarus Chaweras VOA interview

On the ground, the shortage of fuel is affecting many sectors including manufacturing and construction sectors, and motorists are having to spend hours waiting in queues outside filling stations, sometimes overnight – ironically, something that will consequently affect national productivity.

The shortages are also affecting the price of some goods and cost of transportation.

But the government says it is doing everything it can including setting up plans to issue special importation permits to companies which consume large quantities of petrol or diesel, according to Secretary to the Treasury MacDonald Mafuta Mwale.

Late last month the IMF agreed an emergency financing facility to help resolve the forex shortages. But the effects of the intervention are yet to be felt on the ground.

There are other less talked about aspects to the problem, including hoarding of fuel, panic buying, illegal under-the-radar black market selling by “cartels”, and blackouts – which are forcing some industries onto increased usage of diesel generators thereby pushing up national demand.

But when the shortages have been around on and off since April, why is it taking the government so long to get on top of the problem?

Back in September, Malawi’s President ordered the Reserve Bank of Malawi to prioritise buying fuel in any foreign currency they could secure to deal with the fuel shortage. At the time, the country’s Strategic Fuel Reserves buffer had been depleted to cover just a few days, instead of the usual 60 days.

Now, MERA and NOCMA authorities are unwilling to say how many weeks worth of reserves the country has, deflecting questions to insist instead that over 70 tankers carrying Fuel are currently enroute to Malawi, but which will only provide 2 months worth of fuel. So here already we see that the problem may not go away. Further, in September we were told that 300 tankers were making their way to Malawi, and yet the fuel shortages persist?

A growing economy

Back in 2017, when the new Strategic Fuel Reserves in Blantyre, Lilongwe and Mzuzu were inaugurated, Malawi’s economy was considerably smaller than what it is today. Since then, there are now more cars on the road. There are a large number of construction projects happening across the country, all guzzling down hundreds of litres of diesel each month, there is more industry that uses diesel to generate electricity, and the recent power outages (caused in part by scheduled repairs, and in part by Cyclone Ana [which hit Malawi in January of this year]) has meant that relatively more people were using petrofuels than before.

And yet, the country’s fuel imports have not increased proportionally to meet such multi-faceted surge in demand. Further, the new Solar Farms which were recently introduced to diversify power sources, are not yet providing consistent power supply, nor do they have the capacity to meet actual demand.

So if you then add in the COVID-19 factor and the Ukrainian War element Chakwera talked about, you end up with a perfect storm, that’s quite difficult to shake off.

A catalogue of errors

Of course not everyone in Malawi accepts this analysis. And the government too has not done itself any favours by perpetuating certain “self-destructive” behaviours. Thus, it’s not surprising that critics have been quick to jump onto, and bundle together other long standing problems with the present fuel crisis issue and fault Chakwera’s Tonse administration as incompetent.

Indeed, there is widespread anger towards the government, which is being portrayed as negligent and focussing on issues that are not a priority to local Malawians at this point in time.

Perceptions that the government has been slow in curbing corruption and the fact that State House does not appear to have made enough visible austerity cuts , for example – to the President’s schedule, all reinforce this stubborn idea that the government of Lazarus Chakwera does not care about the plight of poor Malawians.

So it remains to be seen how the dynamics behind the crisis play out in the medium to long term. Already, some motorists have been driving into Mozambique or Zambia, to fill up their tanks because they can’t find fuel locally. Obviously this is not sustainable and cannot be relied upon in the long term.

So minimally the government of Malawi should urgently review its long term strategy regarding fuel availability, present usage, estimated near-future usage, and ways in which they can procure more resource more cheaply, while fulfilling consumption. That strategy should also look at practical ways in which Malawi can be weaned off biofuels, so that it is not constantly at the mercy of fluctuations in global fuel prices, or supply disruption and constraints.

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