Fuel tanks full of air

Malawi’s energy sector presents a stark contradiction. While motorists routinely endure gruelling queues for fuel the country can barely afford, the National Oil Company of Malawi (Nocma) seeks to double its strategic fuel storage capacity.

Currently, Nocma’s fuel reserves located in Matindi in Blantyre, Kanengo in Lilongwe and Sonda in Mzuzu have the capacity of 60 million litres and the State-owned firm seeks to increase to 120 million litres.

In the meantime, Optech Engineering and Einstein Construction have secured the $9.7 million (about K17 billion) Mzuzu expansion while tenders for Blantyre and Lilongwe are underway.

Economists and policymakers have expressed mixed reactions on whether it is prudent to build larger jars when there are no means to fill them.

But Minister of Energy Jean Mathanga, appearing on No Excuses MW, Nation Online’s hard-hitting business and economic affairs programme that airs every Thursday on Facebook and YouTube, firmly defended the strategy.

During the interview, she confirmed that the government is actively processing tenders for new storage facilities, framing the infrastructure drive as an indispensable mechanism to strengthen national security of supply.

Mathanga: Malawians should not be stressed. | Nation

“Malawians should not be stressed; we are working so hard to ensure that we have enough fuel for our consumption,” Mathanga insisted.

Malawi consumes about two million litres of fuel daily. In theory, the current 60 million-litre infrastructure should provide a comfortable 30-day buffer.

However, in reality, persistent foreign currency shortages mean reserves are chronically depleted, often leaving the nation with less than a week’s cover.

In a written response yesterday, Scotland-based Malawian economist Velli Nyirongo argued that the expansion strategy ignores the country’s most immediate structural bottleneck.

“Malawi faces a rather uncomfortable paradox: we are considering doubling our fuel storage capacity at precisely the time when we struggle to secure enough foreign exchange to keep existing fuel supplies flowing,” he observed.

Nyirongo noted that while Nocma’s proposed expansion could strengthen energy security in the long term, “infrastructure should follow the constraint, not distract from it”.

He said the root cause of dry pumps is financial, not structural.

Nyirongo’s sentiment is echoed forcefully by civil society with consumer rights advocate Wazamazama Katatu warning that building sprawling infrastructure amid unstable supply of petroleum products alienates everyday citizens.

He noted that the immediate plight of the consumer is completely detached from multi-million-dollar long-term capital plans.

The capital expenditure becomes even harder to justify under Malawi’s current macroeconomic strain where the government is operating under severe fiscal pressure, weighed down by high public debt at more than 90 percent of the economy, persistent deficits and significant outstanding compensation liabilities hovering around K3.2 trillion and statutory expenditure grabbing up to 99 percent of government’s domestic revenue.

When confronted about the reality of depleted stocks and sporadic queues, Mathanga downplayed public anxieties, arguing that revealing precise stock counts could cause unnecessary panic.

She said: “The Ministry of Finance [together with the Reserve Bank of Malawi] is prioritising us in forex allocation for fuel imports. We have the figures, but they may probably mislead the public since the figures change continuously each day as fuel is received and distributed. Our responsibility, therefore, is to ensure that the country has adequate stocks and that replenishment is continuous.”

The infrastructure deficit, according to the Ministry of Energy, is not a competitor to the forex crisis, but part of its solution.

Malawi’s landlocked status leaves it exceptionally vulnerable to supply chain disruptions. When international oil prices drop, a nation with small storage capacity cannot capitalise on cheap fuel.

The fuel storage tenders are tethered to plans for rail offloading infrastructure at the Kanengo and Matindi depots in a move meant to transition bulk fuel importation from expensive road tankers to rail via the Nacala corridor to help slash landing costs.

Beyond the depots, the government is also pursuing a pipeline blueprint.

To bridge the gap between dry reserves and expanded infrastructure, Mathanga said that the government’s ambitions extend far beyond localised storage tanks.

Capital Hill is exploring grander regional oil pipeline options with Tanzania, Zambia and Mozambique to establish a direct umbilical cord to coastal ports. This pipeline strategy serves as the logical anchor for the domestic depot expansions.

But critics remain unconvinced by long-term structural dreams while immediate liquidity remains choked.

Beyond the economic debate, Nyirongo raises critical governance questions regarding the lack of public scrutiny over these multi-million dollar commitments.

Ultimately, both sides of the debate carry merit, revealing a classic developmental dilemma. Focusing solely on immediate forex interventions keeps Malawi in a hand-to-mouth cycle, perpetually vulnerable to global and regional shocks.

On May 22 2022, former minister of Energy Ibrahim Matola said each of three strategic reserves would gain 20 million litres, providing 90 days’ cover as construction was scheduled to start in October that year and finish by 2024.

Centre for Social Concern economic governance officer Agness Nyirongo warned that silence after a major public procurement process is problematic.

Centre for Human Rights and Rehabilitation executive director Michael Kaiyatsa said that with inadequate reserves, any disruption in imports, foreign exchange or supply chains can quickly become a national crisis.

In a separate interview, Consumers Association of Malawi (Cama) executive director John Kapito said Nocma suffers from accountability and transparency problems, stressing, it only informs the public when it is convenient to it.

Last month, Nocma said it embarked on a cleaning, inspection and maintenance exercise of fuel storage tanks at its Blantyre Depot as a routine, safe and reliable measure to detect corrosion, defects and other potential risks to the tanks.

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