Government has promised to stop direct importation of fuel through the National Oil Company of Malawi (Nocma) and will instead leave the task to the private sector.

The promise is contained in Malawi Government’s Letter of Intent to IMF Managing Director Christine Lagarde jointly signed by Finance Minister Ken Lipenga and Reserve Bank of Malawi (RBM) Governor Charles Chuka.

The two economic management chiefs said the development is one of the measures of ensuring that government minimizes severe risks to the budget posed by Nocma operations, including government guaranteed loans for fuel imports.

Petroleum Importers Limited (PIL) Chief Operating Officer Mike Ngwira yesterday said Malawians should not panic with the withdrawal of Nocma from fuel importations since his organisation has the capacity to import enough of the commodity into the country.

PIL is a consortium of petroleum companies in the country that imports supplies on behalf of the companies.

“PIL has been importing the commodity since 1999 without problems. Our major challenge of late has been the shortage of forex,” said Ngwira.

Government says Nocma will limit its activities to its function of managing strategic fuel reserves for the country.

“The government has initiated steps to reduce the risks to the budget posed by contingent liabilities and operational losses of state owned enterprises,” reads the letter in part as posted on the IMF website.

“The contingent liabilities are mainly loans from banks and payment arrears while the operational losses arise from administratively set prices and tariffs that are below cost recovery levels and generate substantial implicit and explicit subsidies,” says government.

Over the past 12 months, Nocma has been importing fuel into the country, alongside PIL.

However, persistent fuel shortages over the past two years forced the the Malawi Energy Regulatory Authority (Mera) to licence more private companies to import fuel into the country and meet their needs.