Mera says uncertain on fuel price outlook

Malawi Energy Regulatory Authority (Mera) says it cannot forecast the direction of local fuel pump prices in the coming months.

Mera sentiments follow data contained in the Reserve Bank of Malawi (RBM) Monetary Policy Report, indicating that global oil prices are projected to ease to an average of $73 per barrel in the first quarter (January to March) of this year.

In an interview on Monday, Mera consumer affairs and public relations manager Fitina Khonje said the global oil market is unpredictable with price fluctuations as such it is not safe to bank on the projections.

“There are assorted factors that influence price changes in terms of establishing prices and we may not be able to forecast the prices because we work based on actuals not projections. We look at the actual landed cost at a given time,” she said.

RBM figures show that global oil prices, which rose to an average of $79.57 per barrel in the fourth quarter (October to December) 2021 could ease as the Organisation of Petroleum Exporting Countries (Opec) agreed to maintain its production targets on anticipation that the Omicron variant would be short-lived with minimal disruption on economic activity.

Reads the report in part: “It is expected that Opec’s decision would result in normalisation of demand and supply as well as recovery of inventories with Brent crude oil prices projected to ease in the first quarter of this year.”

While indicating that the downward projection could be good for the country, Consumers Association of Malawi executive director John Kapito indicated that the country continues to be overshadowed by other economic variables.

“The unpredictable kwacha has a huge influence on prices of landed fuel costs,” he said.

In a statement issued in January, Mera indicated that key factors that affect landed costs of petroleum products are the free on board prices of refined petroleum products on the international market and the exchange rate of the kwacha against the dollar.

Mera also indicated that the Price Stabilisation Fund balances for petrol, diesel and paraffin averaged K900 million against the recommended minimum of K5 billion at the beginning of the month. Petrol remains at K1 150 per litre, diesel at K1 120 per litre and kerosene or paraffin at K833.20 per litre.