The Liquid Fuels and Gas Department is responsible for the development and management of policies, regulations, and strategies to ensure the sustainable production and supply of liquid and gas fuels in Malawi. The department operates under the Director of Energy Services and is structured into two divisions:
- Liquid Fuels Division
- Gas Division
CORE FUNCTIONS OF THE DEPARTMENT
The department is tasked with:
- Developing, reviewing, and overseeing the implementation of policies, laws, regulations, programs, strategies, and budgets for the liquid and gas fuels sector.
- Initiating and managing projects related to liquid and gas fuels exploration, production, transportation, and utilization.
- Developing and ensuring the implementation of the National Liquid and Gas fuels Emergency Plan.
- Developing and ensuring the implementation of the National Liquid and Gas fuels Production and Supply Masterplan.
- Monitoring the procurement and delivery of Liquid and gas fuels to ensure security of supply.
- Coordinating and engaging with sector working groups and stakeholders to enhance collaboration and efficiency in the Liquid and gas fuels sectors.
- Monitoring the performance of the Ministry’s agencies in the Liquid fuels and gas sector and providing strategic guidance.
- Conducting research and capacity-building initiatives to promote efficiency and sustainability in the Liquid and gas fuels industry.
MALAWI FUEL TRANSPORTATION AND STORAGE INFRASTRUCTURE PROJECTS
The Government of Malawi through the Ministry of Transport embarked on the refurbishment of railway lines across the country. This has necessitated the diversification of fuel lifting which now includes rail transportation of the commodity in a bid to ensure security of supply in the country. This is strategic, considering the cost advantage and improved efficiency compared to road transportation.
The government has since resumed fuel transportation from Nacala to Lilongwe and Blantyre by rail. Further to this, the Government has also resumed fuel transportation by rail from Beira to Marka in Nsanje using Sena Corridor. This has seen an increase of fuel being ferried by rail to 15% from the 13.7% in the previous year. Construction of railway line from Marka to Blantyre is currently underway and once completed fuel will be lifted from Beira to Blantyre and Lilongwe through rail thereby having a significant increase of fuel being lifted using the cost-effective mode of transportation of fuel.
Strategic Fuel Reserves
The Malawi Government is in the process of increasing the capacity of strategic fuel reserves from the current 60 million litres to 120 million litres. This is to ensure security of supply of the commodity in the country.
In addition to the strategic reserves the government embarked on the refurbishment of Chilumba and Chipoka fuel Deports. When finished, this will see an increase of fuel being stored in the country.
INITIATIVES
G-TO-G FUEL PROCUREMENT
The country’s fuel supply challenges over recent months have necessitated a change in government policy regarding fuel procurement. This change transitions from an Open Tendering System (OTS) to a Government-to-government (G-to-G) arrangement. The decision stems from the observation that OTS has proven to be fragmented, putting pressure on the country’s foreign exchange resources. Consequently, OTS results in multiple competing demands for foreign exchange from commercial banks and the Reserve Bank, creating difficulties in fulfilling existing Letters of Credit.
Under the G-to-G fuel procurement arrangement, the Government, through the Ministry of Energy, will coordinate fuel procurement centrally. This process will involve Gulf oil-producing countries and will be conducted through an approved structure that encourages participation from both the government and the private sector.
The government has reviewed the Liquid Fuels and Gas (Production and Supply) Act of 2004 to incorporate the G-to-G fuel procurement arrangement. The amendment, which was enacted in December 2024, still permits OTS as an exception, should the government need to revert to it at any time.
Towards the end of 2024, Malawi procured 51.5 million liters of fuel through a G-to-G arrangement with the governments of Kenya and the United Arab Emirates (UAE) as part of an emergency procurement. The country is currently negotiating its own G-to-G fuel deals with Gulf oil-producing countries such as the UAE, Oman, Saudi Arabia, and Kuwait.
With the G-to-G procurement arrangement, the country is expected to ensure a sustainable, stable, and secure fuel supply at competitive prices.
