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Wed05222013

Last update04:32:58 PM

Back Daily Times Headlines Features Ideas on how Malawi can address fuel woes; Addressing the demand side of fuel

Ideas on how Malawi can address fuel woes; Addressing the demand side of fuel

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That Malawi has over the past couple of years experienced one of the worst fuel crises is not rocket science. No motorist can claim that they have never spent hours on the queue waiting to refuel, unless they are well connected.

Forget the political excuses, such as the issue of logistics at the ports, the cause of the fuel crisis is obvious. Malawi has often times find herself with no forex to buy enough fuel to keep the country going.

While Capital Hill has over the years made serious attempts to address the supply side of the equation by borrowing heavily throughout the years, the demand side has always been on the rise as the population of vehicles continues to grow on the country's roads.

That is why time and again the sight of long queues returning to the gas stations has become a norm.

Honestly speaking, a fuel importation bill of around US$35 million per month or a fifth of the country's monthly import needs is not sustainable, especially for a country such as Malawi whose exports are very minimal.

Sitting at the dinner table at the Charted Institute of Marketers (CIM) Members Group Annual Lake Conference one Thursday evening, one top marketer said:

"Malawi's fuel problems are here to stay unless the President makes some bold decisions which will be hated by some quarters of the society but will in the medium to long term provide a lasting solution to the problem".

According to the marketer, what is happening now is like chasing the wind, arguing the country will keep borrowing to ensure fuel availability but that at the same time, the fuel import bill will keep rising as more and more people buy vehicles.

And just recently, Malawi had to be bailed out by a US$250 million loan facility from the PTA Bank which will help the country have enough fuel up until April 2013.

"Just imagine the number of heavy goods vehicles that you meet when travelling between Blantyre and Lilongwe. Their population is enormous. You will find trucks carrying beverages, sugar, cement and many other commodities between these two cities.

"Do you know how much fuel these vehicles are consuming on a daily basis? Plenty. Do you know that we can save the fuel by just putting this load on the rail and tell the owners to get their goods in Lilongwe or Blantyre?" he asked.

For that to happen, he continued, there is need for the President or Capital Hill to announce heavy charges for people hauling cargo between Blantyre and Lilongwe.

"The fees should be so prohibitive that you will have to think twice before transporting your goods by road. The country invested plenty of money in the rail which we are underutilising," he said.

Another marketer chipped in: "What if the same could be replicated in the passenger service vehicles. There are plenty of minibuses that are operating in our towns and cities which are consuming plenty of fuel".

He suggested the re-introduction of big busses which could use less fuel and operate in cities rather than having plenty of minibuses going in one direction.

One big double deck bus, according to him, can replace about seven minibuses.

"The minibus association can own these buses and ensure that they leave every five to 10 minutes. These will bring sanity in the industry as people will be assured of a readily available bus every," he added.

To reduce the numbewr of vehicles operating in the country's towns and cities, the marketers proposed the introduction of toll gates where those driving into cities should have a better reason for doing so.

"Those driving into towns should pay a premium for that. This will help in reducing the number of vehicles playing on our streets. This will greatly help in saving fuel," said one of the marketers.

Of course the proposals would likely face stiff resistance from other stakeholders such as truck owners and minibus owners who would likely go to court to get injunctions.

Central East African Railways (Cear) Marketing Director Wilfred Ali observed in an interview that his company has enough capacity to haul goods between the cities of Blantyre and Lilongwe.

Ali noted that apart from the huge saving on fuel, the owners of the goods will save a lot as rail transport is extremely cheaper than road transport.

It is interesting to hear from the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) Chief Executive Officer Chancellor Kaferapanjira that government is making some steps in reducing fuel importation bill by making the commodity expensive through the automatic pricing mechanism.

"As a matter of fact reliable sources indicate that the demand for fuel has already dropped from a high of US$30 million per month when fuel prices were artificially controlled to about US$23 million per month now due the automatic pricing mechanism, another reform measure.

"This is an important efficiency measure of the reforms. One now cannot just decide to drive out without a justification! In addition government is not going creating another liability to oil importers. Remember that government owes about K24 billion (the amount may be slightly lower now) because of accumulation of shortfalls arising from controlled fuel prices," said Kaferapanjira.

There is, however, need for proper timing for the authorities to put in place the measures as suggested by the marketers. Otherwise, such measures have great potential of making an administration unpopular.

 

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