Malawi Energy Regulatory Authority (Mera) has ruled out the possibility of easing some levies and taxes in the fuel pump price build up, which make up about 29 percent of the pump price.
Mera director of finance Zachariah Ng’oma said in an interview in Lilongwe yesterday that about 60 percent of factors that influence fuel pricing, mainly landing costs, are beyond the regulator’s control while the remaining 40 percent comprises local levies and taxes.
Grace Kathewera and Mera chief executive officer Dad Chinthambi. | Andrew Viano
He said the Price Stabilisation Fund (PSF), which cushions consumers from changes in variables that trigger fuel pump prices adjustments, remains depleted and in arrears of about K1.1 trillion.
“With the fund in arrears, our capacity to absorb shocks is limited. It could take about 4.5 years to clear the backlog,” said Ng’oma, adding that K12 billion has been collected since the January adjustment.
He said about K20 billion in levies has been raised, but obligations to institutions such as the Roads Fund Administration (RFA) are still outstanding.
Said Ng’oma: “The largest components are road levy and Marep [Malawi Rural Electrification Programme]. Removing them would disrupt critical services, including contractor payments and rural electrification.
“We also need to maintain taxes and company margins to keep suppliers operating. There is very little room to manoeuvre. The reality is that we are buying expensively and must sell accordingly.”
Malawi’s position sets it apart from regional peers that are using fiscal tools to cushion consumers as global oil prices rise.
The Nation analysis of the new price build-up shows that about K1 928 out of K6 672 per litre, equivalent to 28.9 percent, is made up of levies, taxes and cost-recovery charges, highlighting the weight of domestic policy in the final price.
The road maintenance levy, at K521 per litre, is the single largest component followed by excise duty at K279 per litre and import duty at K254. Other significant charges include the rural electrification levy at K207 and under-recovery costs at K350, which is a legacy burden from previous price stabilisation efforts.
In South Africa, authorities have temporarily cut a key fuel levy to absorb part of the global oil price surge, while Zambia has suspended excise duty and zero-rated value-added tax on fuel imports for three months to cushion consumers and businesses.
The contrast highlights a policy divergence: while others are trading off short-term revenue to soften the shock, Malawi is prioritising fiscal stability and continuity of funded programmes.
Fuel levies in Malawi finance critical public services, including road infrastructure and rural electrification, and are a key revenue stream for government at a time of constrained fiscal space.
But analysts warn that the structure is feeding directly into inflation and worsening household welfare.
In an interview yesterday, Centre for Social Concern economic and governance officer Agnes Nyirongo said fuel levies are inherently regressive, disproportionately affecting low-income households through indirect price increases.
“Fuel levies tend to be regressive in effect. While they are applied uniformly, their impact is disproportionately felt by low-income households,” she said.
Nyirongo said rising fuel costs quickly translate into higher transport fares and food prices, forcing vulnerable households to cut spending on essentials such as education and healthcare.
Consumers Association of Malawi executive director John Kapito also warned of broader economic spillovers, urging businesses to avoid exploiting the situation.
“It is important to realise that the current prices announced by Mera will have a huge impact on the cost of goods and services. We are therefore appealing to every trader not to take advantage of these increases by unfairly pushing prices beyond the reach of many consumers,” he said.
Kapito further cautioned that maintaining fuel supply remains critical, warning that shortages could trigger black market activity and worsen consumer suffering.
