The Malawi Government has made significant progress in clearing fuel levy arrears and reducing importer under-recoveries. According to data from the Office of the President and Cabinet (OPC), the government has cleared K205.4 billion in fuel importer under-recoveries and K103.29 billion in statutory levies arrears over the past 12 months. This development follows the restoration of the automatic pricing mechanism (APM), which had been suspended earlier.
The suspension of the APM had led to substantial importer under-recoveries, statutory levy arrears, and fuel shortages in Malawi. The previous policy, implemented by the administration of President Lazarus Chakwera from 2023 to 2025, kept pump prices below landing costs, resulting in losses for importers and the depletion of the Price Stabilisation Fund (PSF). As a result, importers resorted to withholding and utilizing other statutory levies, including the road maintenance levy, to stay afloat.
The OPC data shows that accumulated importer under-recoveries have decreased from K949.2 billion to K743.8 billion, representing a 21.6 percent cut. Similarly, historical levy arrears fell from K504.37 billion in December 2025 to K401.08 billion in August 2026, a 20.5 percent recovery. The reduction in under-recoveries and levy arrears is attributed to the restoration of the APM, which has eased pressure on the National Oil Company of Malawi (Nocma) and Petroleum Importers Limited (PIL).
The previous policy had a ripple effect on various institutions in Malawi. The Roads Fund Administration (RFA), which relies heavily on the road maintenance levy, struggled to pay contractors, leading to a halt in road maintenance nationwide. The Malawi Rural Electrification Programme (Marep) also suspended its implementation midway due to a shortage of funds. Additionally, the Malawi Bureau of Standards faced challenges in servicing its specialized testing equipment.
However, with the improved remittances by the Malawi Energy Regulatory Authority (Mera), these institutions are now receiving the necessary funding. The OPC has also announced plans to increase national fuel-storage capacity and strengthen the long-term security of fuel supply. A contractor has been engaged for a 10-million-litre Mzuzu fuel storage facility, with construction set to begin imminently.
Economist Velli Nyirongo, based in Scotland, views the shift as a positive step towards financial discipline. However, he warns that the debt mountain remains a concern. Nyirongo notes that the reduction in accumulated under-recoveries and levy arrears is a positive development, but more needs to be done to address the underlying issues.
The Malawi Government's efforts to clear fuel levy arrears and reduce importer under-recoveries are ongoing. The OPC has confirmed that similar expansion projects for Lilongwe and Blantyre are at the contractor procurement stage. These developments aim to increase fuel storage capacity and ensure a stable fuel supply in the country.
Key points
- The Malawi Government has cleared K205.4 billion in fuel importer under-recoveries and K103.29 billion in statutory levies arrears over the past 12 months.
- Accumulated importer under-recoveries have decreased by 21.6 percent, while historical levy arrears have fallen by 20.5 percent.
- The government has engaged a contractor for a 10-million-litre Mzuzu fuel storage facility to increase national fuel-storage capacity.
