We welcome Cama’s fuel hike proposal—Mera
The Malawi Energy Regulatory Authority (Mera) described the proposal by Consumers Association of Malawi (Cama) to hike fuel prices as valid, but said it will wait for its board to decide.
In a statement, Cama executive director John Kapito demanded immediate fuel price hike, saying the country’s weak currency coupled with the rising global fuel prices mean any delays to respond will hurt the economy as importers could not sustain the losses.
Reads the statement: “The current losses suffered by the petroleum importers are unsustainable and continue to challenge the continued importation of fuel in the country.
“Price increases of petroleum products negatively affect consumers because of its price-trigger effect on other goods and services. However, when this is weighed against the scarcity of fuel on the market and its negative effects, Cama believes the effects of regulated higher prices are a better devil than fuel scarcities.”
Kapito, who partly attributed the high cost of importing fuel to recent devaluations, says a weaker kwacha will continue to trigger price increases, especially on strategic commodities like fuel.
“Mera’s mandate is to regulate and not to control prices of fuel and that prices of fuel must never be politicised. And Mera should maintain its independence and refrain from creating unnecessary challenges to both consumers and fuel importers,” Kapito said.
In an interview, Mera consumer affairs and public relations manager Fitina Khonje said Cama’s observations are true and that the authority already disclosed the current challenges, “but any decision will be taken by the board”.
“As you can recall, Mera recently disclosed the current situation and we would like to agree with the views of the association but for now what we can say is that the decision to revise fuel prices is made by the board,” Khonje said.
Khonje did not elaborate the dates of the board meeting but Mera board meets almost every month to review developments in the price build-up, which, if the price movements are above or below five percent of the landing price, qualifies for a price review.
Recently, Mera admitted that it is not collecting the Road Fund Administration (RFA) levy to cushion importers from the current situation but this has also resulted in RFA failing to secure funds to pay its contractors.
Reports show that indecision by the government on fuel prices has resulted in K785 billion losses, which Mera must pay petroleum importers in compensation.
Mera’s failure to reimburse the under-recoveries has now forced fuel importers, desperate to shore up their working capital and keep trading to withhold K330 billion in levies which are supposed to be remitted to beneficiary institutions, according to reports.
The price stabilisation levy which Mera uses to cushion price increases is said to have been depleted because of the import losses leading to negligible payments from the fund, thereby crippling its ability to cushion consumers from price movements.
Meanwhile, the majority of members of Parliament currently meeting in Lilongwe, on Wednesday appeared to back a recommendation by the Parliamentary Committee on Natural Resources and Climate Change for Mera to increase fuel prices although Democratic Progressive Party lawmakers boycotted the debate on the matter.
