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Malawi Considers Building Oil Pipeline From Beira Port to Transport Fuel

Malawi Considers Building Oil Pipeline From Beira Port to Transport Fuel

The pipeline will be able to transport 250,000 litres per hour to Malawi, while it takes a truck around seven days to go back and forth to Beira to transport 35,000 litres.

The country imports 50 per cent of its fuel from the port of Beira and 20 per cent from Nacala and the remaining 30 per cent from the port of Dar es Salaam, and the pipeline could also ease import costs.

a d v e r t i s e m e n t

Malawi spends around 600 million dollars a year on fuel imports alone, as consumption of diesel and petrol continues to rise rapidly.

Figures from the energy industry regulator, the Malawi Energy Regulatory Authority, show that on average Malawians consume around 50 million litres of fuel a month, equivalent to 600 million litres a year. Per day, Malawians consume around 845,000 litres of petrol and 834,000 litres of diesel. And to cope with this demand for fuel, the country needs 600 million dollars a year.

The chairman of the board of the energy regulator, Henry Kachaje, attributed the increase in the cost of fuel imports to the high demand for fuel on the market in recent years.

Kachaje guaranteed sustainability in fuel imports on the basis of funding of 50 million dollars from the Arab Bank for Development in Africa (BADEA) to replenish the country’s fuel reserves to alleviate recurring fuel supply challenges.

Malawi has been facing recurrent fuel shortages since August last year, largely because the country does not have enough foreign currency. The Central Bank of Malawi said in June that the government’s foreign exchange reserves were not enough to last a month.

″The country needed an average of about 300 million dollars in petroleum products, but when the prices of petroleum products on the market went up, the figure doubled to almost 600 million dollars″.

Kachaje said that the energy regulator is working with fuel suppliers to minimise the shortage. “One of the ways is to involve suppliers who are willing to supply products to Malawi in Kwacha [the local currency],” said Kachage.

Frequent interruptions in the supply of fuel leave Malawians frustrated. In the long term, the chairperson of Malawi’s energy regulator reiterated that the government is exploring the feasibility of investing in an oil pipeline, which is a safer and more efficient means of transporting fuel.

He also said that the government is considering building storage tanks in Nacala to support the strategy of increasing the transport of fuel by rail. To this end, Mozambique has granted space to Malawi to build a dry port near the port of Nacala, Nampula province, with the aim of speeding up customs clearance of goods and making transport logistics more flexible, especially for fuels and fertilisers.

The concession of the space is the result of the deepening of diplomatic and bilateral relations and will help Malawi to ease transport costs and reduce the price of goods. The space has been designed to include railway sidings, warehouses, cargo handling equipment, fuel depots and pipelines, among others. This comes at a time when the sector has recently faced a number of risks, including disruption to road and rail infrastructure, which has necessitated the need for diversity in import options and routes.

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The National Energy Policy stipulates that Malawi must diversify its fuel import routes.

“The country has also identified alternative routes to ensure security of supply should any of the ports of Beira, Nacala and Dar es Salaam be inaccessible. These alternative routes include access to fuel through the Feruka pipeline in Mutare and Masasa in Harare, Zimbabwe and Mtwara in Tanzania,” said Kachaje.

He also said that the diversification of suppliers remains fundamental to sustaining the country’s fuel supply. In times of scarcity, Malawian drivers are forced to pay exorbitant amounts for fuel on the black market, smuggled from filling stations on the border with neighbouring Mozambique, and others are forced to cross the border to obtain petrol or diesel, which is in short supply in Malawi.

Malawi is one of the countries with the highest fuel prices in the SADC and has no direct access to the sea, depending on the ports of Beira and Nacala in Mozambique and Dar es Salaam in Tanzania to import its fuel. The Liquid Fuels and Gas Law stipulates that the country must always maintain fuel stocks for 90 days, of which 60 days must be kept in strategic reserves and 30 days in oil marketing companies.

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