Zimbabwe offers to pay off Malawi debt with fuel

Comment & Analysis
BY NQABA MATSHAZI ZIMBABWE has proposed to pay its US$23 million debt to Malawi in fuel, a move that could see Zimbabweans facing fuel shortages. New Malawian President Joyce Banda sent a delegation to Zimbabwe, which returned to the country on Thursday, with news that the country would receive fuel for a corresponding value.

“The Zimbabwe government has agreed to give us fuel and very soon they will dispatch trucks,” Malawi Energy and Mining minister, Cassim Chilumpa told Malawi media. “We have accepted this arrangement because currently we are in need of the fuel.”

The Malawian delegation, which came to the country last week, was expected to collect US$12 million, while the rest was expected to be settled later, but the fuel barter deal, means Zimbabwe might not have been able to raise the money.

Repeated efforts to get a comment from the Minister of Energy Elton Mangoma were fruitless as his mobile phone went unanswered. Finance minister Tendai Biti was said to be out of the country.

The debt dates back to 2007 when Zimbabwe, in the throes of an economic and political meltdown, was failing to produce enough food to feed the nation.

Malawi is now also facing a cash crunch after western countries withdrew balance of payments support, with the country facing biting fuel shortages.The country has been scrounging around for fuel supplies and the latest deal may represent a breakthrough for them, as in April Malawi had to depend on Mozambique and Zambia for fuel, while this month they went to South Africa.

Zimbabwe is expected to provide fuel for next month. The late Malawian President Bingu wa Mutharika also came to Zimbabwe in February, seeking the money and also how to solve the fuel problems the country was facing and the barter deal seems to be the best for the two countries.

However, it was not immediately clear how Zimbabwe was going to provide the fuel without affecting domestic consumption, considering that the country is also a net importer.

Players in the industry have suggested that maybe the country would export the blended E10 fuel, which has faced resistance on the Zimbabwean market.