Kenya Bails Out Malawi with Fuel Deal Amid Crisis

In a potential shift in business strategy, Kenya appears to have abandoned the contested fuel importation deal with Uganda and Tanzania in favour of supporting its African neighbour, Malawi.

This followed Kenya’s decision to support Malawi, which had faced weeks of severe fuel shortages, by facilitating the delivery of thousands of metric tonnes of fuel.

According to information from the Ministry of Energy in Malawi, Kenya has, under the government-to-government importation deal, helped Malawi procure 40,000 metric tonnes (about 51.5 million litres) of combined cargo of diesel and petrol from Abu Dhabi, United Arab Emirates.

”This consignment has been procured under the Kenya bilateral arrangement between the Government of the Republic of Kenya and the Government of the Republic of Malawi using Kenya’s existing government-to-government arrangement with Abu Dhabi while Malawi works to put in place its own government-to-government fuel supply framework with Gulf countries,” the government of Malawi stated.

The deal to supply the Malawian nation with the procurement follows an earlier bilateral agreement signed between Kenya’s Energy Cabinet Secretary Opiyo Wandayi on November 6 last year to enhance cooperation in the petroleum sector.

The partnership followed a high-level consultation between the Presidents of Kenya and Malawi, William Ruto, and Lazarus MacCarthy Chakwera, at the United Nations General Assembly in New York, USA, in September 2024.

Malawians have for the past few weeks been in crisis following an acute fuel shortage that saw them drive for kilometres to get the crucial product, a situation that threatened to stifle the economy.

”This emergency fuel procurement aims at supplementing the normal fuel imports by the National Oil Company of Malawi (NOCMA), Petroleum Importers Limited (PIL), and other licensed importers, which have faced challenges in accessing fuel import financing leading to the current fuel shortages,” the government of Malawi stated.

The vessel carrying the maiden consignment of fuel has already docked at the Port of Tanga in Tanzania, as the shipment had to pass through the country. This route was chosen due to the shorter distance from Tanga Port to Malawi, which is approximately 1,300 kilometres, compared to the 1,800 kilometres from the port of Mombasa to Malawi.

In economic terms, Kenya’s decision to facilitate the fuel importation for Malawi under the G2G deal marks a significant shift, reinforcing Kenya’s role as a key player in trade dynamics across East and Southern Africa.

Kenya itself was on the brink of walking away from the G2G importation deal in December, and it took the intervention of the Cabinet to extend the deal.

”The Cabinet has approved the extension of the government-to-government (G2G) arrangement for the import of refined petroleum products,” the Cabinet dispatch read in part.

According to the economists, the decision to extend the deal was based on so many factors key among them being the stabilizing of the price of fuel.