Fuel prices up

Malawians should brace for more hard times as Malawi Energy Regulatory Authority (Mera) has raised prices of diesel and petrol effective March 4 2016.

The cost of fuel has a significant impact on the pricing of goods and services; hence, Malawians—already reeling from the pressure of reduced buying power and a depreciating kwacha—will likely be affected by the decision.

Mera board chairperson Dingiswayo Jere said in a statement yesterday following the changes, petrol has gone up by 4.41 percent from K711.90 per litre to K743.30 per litre whereas diesel is now selling at K722.80 per litre from K671.30 per litre, representing a 7.67 percent increase. Paraffin, used mostly by industry and the majority of the poorhouseholds, is now selling atK580.40 per litre from K526.30 for the same quantity.

In the statement, Mera said it considered recent trends in the world petroleum products’ prices and changes in other macroeconomic fundamentals, notably the exchange rate and inflation rate and their impact on energy prices.

During the review of thefundamentals, according to the statement, Mera observed that the free on board (FOB) prices for petrol declined while diesel and paraffin prices increased when compared to the averages obtained in January 2016 used in determining the ruling pump prices.

Mera also said since the last review of the In Bond Landed Cost (IBLC) of petroleum products on February 2 this year, the kwacha has depreciated by 2.56 percent against the dollar trading at K750.85 from K732.12.

Reads the Mera statement in part: “The combined effect of the movement of the FOB prices and exchange rate of the Malawi kwacha to the US dollar has resulted in increase of the landed cost of petrol, diesel and paraffin by 0.21 percent, 6.37 percent and 7.83 percent respectively.”

Based on the automatic pricing mechanism (APM), petrol did not qualify for a price revision since the change in its landed cost was within the ±5 percent trigger limit whereas diesel and paraffin qualified for the revisions.

Prices of fuel in the country have relatively been stable in the past year.

Mera has also revised upwards the transport brokerage fees from 2.2 percent of the Road Freight Rates to 2.5 percent and the retailers’ margins from K44.73 per litre to K65.85 per litre to allow the retailers and the transport broker to fully recover their costs and earn a fair rate of return on their investment; thus, to ensure uninterrupted supply of fuel in the country.

Mera has, however, maintained the cost of electricity at K57.72 per kilowatt hour (kWh).