Mera data points to fuel price hike

Malawi Energy Regulatory Authority (Mera) says it will assess changes in landed cost for fuel and other economic factors to get direction on whether to adjust fuel pump prices.

In an update on the landed costs of fuel, Mera yesterday indicated that key factors that affect landed costs of petroleum products, including free-on-board (FOB) prices of refined petroleum products on the international market and the exchange rate of the kwacha against the dollar have been increasing.

Reads a statement from Mera: “Since the establishment of the ruling maximum pump prices in October 2021, the landed costs of petrol, diesel and paraffin have increased by 16.16 percent, 24.67 percent and 24.71 percent, respectively.”

The energy regulator added that under the automatic pricing mechanism (APM), which Malawi adopted in 2012, prices are adjusted when the changes go beyond the plus or minus five percent trigger band.

Mera has since indicated that when its board of directors is reconstituted, one of its key tasks will be consideration of the landed costs and other economic factors to determine appropriate prices.

In an interview yesterday on the direction of pump prices, Mera consumer affairs and public relations manager Fitina Khonje pleaded for patience, stating that a review of the factors will give direction of the pump prices.

But in a separate interview yesterday, Consumers Association of Malawi (Cama) executive director John Kapito accused Mera of delaying the hike, saying by not doing the needful when all parameters point to a possible increase, the regulator is not doing any justice to consumers.

He said: “Prices of petroleum products have been on the rise since December last year and Mera would have adjusted prices gradually to make the impact less painful to consumers.

“Mera never adjusted the prices and the increases have accumulated to figures that scare the market and will have a negative impact on consumers.”

Kapito called for the removal of levies from the fuel price build up to maintain and stabilise fuel prices.

“If government indeed wants to protect consumers then it must remove the said levies that continue to hurt consumers. We repeat, government is not helping matters by using politics to hold fuel prices. This will hurt consumers more,” he said.

In the past four months, Mera has maintained pump prices after an assessment of the effect of the movement of free-on-board prices, the kwacha exchange rate against major trading currencies and changes in local factors.

Specifically, the pump price for petrol closed December 2021 at K1 150 per litre while that of diesel stood at K1 120 per litre.

Meanwhile, global oil prices have continued to rise following geopolitical tensions between Russia and Ukraine as well as speculation of a further rise amid tight supply which have helped push up global oil prices to a 14-year high.