Malawi Energy Regulatory Authority (Mera) chief executive officer Henry Kachaje has said the regulatory body delayed implementation of a fuel pump price hike to cushion consumers from further economic distress due to Covid-19.
In an interview yesterday, the former Economics
Association of Malawi president said that since March this year when the Covid-19 pandemic hit the country hard, economic activity slowed down and many people were going through hard times.
He said that at the same time, variables used to determine the price review under the Automatic Pricing Mechanism (APM), notably the exchange rate, international oil prices and the landed cost favoured an upward adjustment.
Kachaje said: “So, it was thought wise to cushion the hardship by not immediately implementing fuel increases.”
He said that moving forward, the APM will be used to determine the fuel pricing as has always been the case before Covid-19.
On whether Mera has any plans to suspend or scrap fuel levies in the price build-up to reduce the price of fuel, Kachaje said the levies are set by government and should they find it necessary to review the same, the public will be advised accordingly.
The new announced pump prices saw petrol selling at K1 150 from K899.20 per litre while diesel is now selling at K1 220 from K898 per litre. The average increase in prices is pegged at 22.8 percent.
Responding to a question on the impact of fuel prices
effective Sunday, President Lazarus Chakwera yesterday said he understood the pain Malawians are going through.
Speaking during the fortnightly State House Media Briefing at Kamuzu Pa l a ce in Lilongwe yesterday, State House director of communication and executive assistant to the President Sean Kampondeni stressed that the decision to raise prices of the commodity was unavoidable.
He said the President personally feels the pain and appreciates how the 22.8 percent raise in pump prices has affected Malawians.
Said Kampondeni: “He feels the pain. He knows that an increase of this margin is not a small matter, it is a painful thing, and it is distressing to Malawians across the board.
“The President knows this. The President identifies with this pain because he understands that this affects all Malawians.”
In the September 30 2021 edition of Business Review supplement in The Nation, Mera asked consumers to brace for a rise in fuel pump prices due to the rise in landed costs and the dwindling Price Stabilisation Fund (PSF).
PSF compensates for trading losses for importers in line with the APM framework. Mera indicated that the recommended minimum in the PSF was K5 billion, but said the fund was depleted to about K1.5 billion.
Mera’s reaction followed rising global oil prices, the highest in three years as the world economic recovery from the Covid-19 pandemic was boosting demand.