Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has defended Malawi Energy Regulatory Authority (Mera) decision to hike fuel prices, saying any delay in implementing adjustments would be catastrophic.
MCCCI chief executive officer Chancellor Kaferapanjira said in an interview yesterday that while increases in fuel prices push up the cost of doing business, especially with many companies using generators due to unreliable electricity supply, price increases that are driven by changes on the international market cannot be avoided.
He said: “We all noted how oil prices rose on the international market and the effect of such increases always lags. The recent trends of declines in the oil prices will only filter into local pump prices later.
“As a matter of fact, Mera kept informing us that the pump prices would have gone up way back if it was not for the price stabilisation fund [PSF], which of course cannot last forever. As such, we do not think that Mera has any other option than to adjust the prices in line with movements of oil prices on the international market.
“Let me hasten to say that any delay in making necessary adjustments would be catastrophic as oil marketing companies would not be able to replace their fuel stocks to the same level as below. We cannot afford to do that again, especially after our experience of 2010/11.”
Under the new price structure, a litre of petrol is fetching 6.2 percent more from K932.50 to K990.50, diesel has gone up by 6.9 percent from K935.60 to K990.40 and paraffin is now selling at K785.80 from K735.30 or 3.93 percent hike.
In a statement yesterday in reaction to concerns over the hike, Mera chief executive officer Collins Magalasi said on the parameters derived from the industry’s audited financial statements, the wholesale margins qualified for a 15.82 percent increase, the road freight rates needed to be revised by 10.91 percent and distribution margin for local distribution and facilitation of uplifts from Strategic Fuel Reserves qualified for a 12.67 percent increase.
The PSF was introduced to maintain fuel price stability on the local market and recover importers’ losses.
Globally, oil prices fell to their lowest in a year even as oil producers consider cutting production to try to stem a rising global surplus falling by $2.31 a barrel or 3.7 percent, to a low of $60.29, its lowest since November 2017, according to CNBC.com.
In a telephone interview yesterday, Magalasi hinted there could “a negative development on the pump price” soon.
Earlier, Consumer Association of Malawi (Cama) executive director John Kapito condemned the pump price increase, saying it would push consumers into more misery as they are yet to recover from the two previous two increments which triggered reciprocal hikes in prices of goods and services.