Business Unpacked

Fuel retailers have no case

So, the Malawi Energy Regulatory Authority (Mera) is not a toothless bulldog I have always thought it was! It was refreshing to see Mera closing down some fuel service stations that ignored the new fuel pump prices revised downwards on July 6 2012.

In line with the new automatic pricing mechanism for fuel, which entails upwards or downward adjustment of pump prices depending on variables such as international oil prices, exchange rate fluctuation, among others, Mera passed on the benefits of low oil prices on the world market to local consumers. The new pricing formula also ensures that the pricing structure reflects the long run average cost of petroleum products.

In that regard, pump prices for petrol went down to K441. 10 per litre from K490 whereas diesel has been reduced to K445 per litre from K475. What a happy 48th anniversary of independence it was!

For the record, it should be stated here that this is not the first time pump prices have been reduced in Malawi. The most recent case was in February 2009 when the prices went down from K251.20 per litre of petrol to K213.50 while diesel dropped to K199.30 from K234.50 and paraffin from K165.30 to K132.20.

Greed and hypocrisy best describes the behaviour of fuel retailers whenever pump prices have been revised downwards. They always cry foul that they have old stock bought at higher prices; hence, they will make losses. I do not buy this! Why is it that when prices go up they instantly programme their pricing systems to the new prices and only dilly-dally when it is for the benefit of the consumer?

Take the case of one of the closed service stations in Lilongwe where, two days after the prices were revised downwards, attendants told motorists tongue-in-cheek: “We are still selling at old prices because our technician is stuck in Blantyre; hence, prices on the pump have not been adjusted.” If it was an upward adjustment, would the technician have been stuck?

While Mera may have its problems regarding communication with retailers as suggested by the association, I have always understood communication to be a two-way process; hence, I expected the petroleum retailers, through their association, to be proactive and bridge the communication gap. If we, as consumers, are to buy the Petroleum Retailers Association of Malawi’s argument that there was “poor communication” from Mera, how come other service stations instantly switched to new prices?

With the new pricing mechanism, prices will be like a see-saw; let sanity prevail!

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