National Oil Company of Malawi (Nocma) says it has secured a $37 million facility from the Arab Bank for Economic Development (Badea) to help with the importation of fuel.
This is coming at a time motorists are, most often, being forced to wait for fuel for hours on end.
At other times, the fuel is not even there, a situation that is fanning panic across the country.
According to Nocma, the facility will help the authorities clear the K67 billion debt Nocma has with fuel suppliers.
Nocma Chief Executive Officer Clement Kanyama said the K67 billion facility would help in improving the fuel supply situation in the country.
He said Badea had opened a third cycle of access to a revolving fuel financing facility.
“The debt that we have will be cleared using this new facility with Badea,” Kanyama said.
In April this year, the Treasury issued Guidelines for Guarantees, On-Lending and Borrowing by Public Bodies to improve the management of fiscal risks emanating from guarantees on lending and direct borrowing by public bodies.
Secretary to the Treasury Betchani Tchereni observed in April this year that they issued the guidelines because, in the past, when public bodies defaulted on loans, the government was dragged into such matters—to the effect that it had to assume liability and repay the obligation using public funds.
This, according to Tchereni, would have a negative impact on the fiscal position.
And, speaking to The Daily Times Monday, Tchereni said the Treasury was aware of the arrangement between Nocma and Badea.
He said Nocma had secured a financing deal with Badea on already approved term sheets amounting to around $50 million.
“This facility, it must be emphasised, is not new per se. It is a renewal after an expiry and successful completion/ honouring of the same amount in the past. There are new conditions, and it is not new per se.
“It should also be indicated that following the doctrine of necessity, this has come at a very right time in order to improve the fuel supply situation in the country. There is an opportunity to increase the facility amount following the guidelines my office provided [to stakeholders],” Tchereni said.
He added that the facility was in the form of lines of credit, which means they get to be accessed/triggered when the forex situation demands as such.
“So, it’s not necessarily that today Nocma is going to have the aid figure into its account, but it will be the case that when we have to make a quick payment, Nocma has this facility to ensure that the country does not run dry. Look at it as more of a revolving fund for stability purposes,” he said.
Nocma fully repaid its fuel importation financing facility of $50 million with Badea from April to July 2024 after a 100 percent utilisation.
Nocma had accessed the second cycle of the $50 million Badea fuel import financing facility from September 2023 to December 2023.
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