Fuel Retailers Association has faulted Malawi Energy Regulatory Authority (Mera) for maintaining a fixed margin of K78.44 per litre for petrol and diesel, saying it has adversely impacted retail margins for both products.
The retailers observe that on five consecutive times Mera has adjusted fuel prices upwards since 2020, the energy regulator has maintained the margin at K78.44 for the two products.
In a letter addressed to Mera chief executive officer Henry Kachaje, the association’s chairperson Happy Jere has since asked the authority to immediately adjust the margin to 10 percent of the pump price which they had earlier requested.
Reads part of the letter: “For instance, as at May 2021, 40 000 litres truckload of petrol cost K24 482 400 and the margin was K78.44 per litre giving a percentage margin of 12.81 percent.
“Today, the same truckload is costing K52 060 000 with the percentage margin reduced to 6.02 percent. The same is true for diesel.”
The association has since threatened to take “drastic” action for being forced to bear a heavy burden of business capitalisation with a continued depreciation of returns.
Mera maintained K78.44 as a fixed margin from 2020, up from K75.44 that was maintained from March 2020. Since then, the retail margins have been fluctuating before dropping on five separate occasions when Mera adjusted fuel prices.
According to the association, the fuel retailing business continues to be adversely affected through such a continued trend of reducing retail margin percentage with every fuel price adjustment which is in turn having an effect on retail business capitalisation.
Mera spokesperson Fitina Khonje last evening said they will engage the retailers to map the best way forward based on a model that was already agreed upon.
She said: “The retail margin has been maintained. However, indeed, in percentage terms, the margin has declined. Their request for a margin adjustment could be an indication that the cost of doing business has increased.”
Mera adjusted upwards the prices of fuel at the weekend with an average 22 percent.
The adjustment was a mild push compared to global prices which have been on the rise, and have now been compounded by effects of the Russia and Ukraine conflict.
Following the 22 percent average increase, the price of petrol jumped from K1 150 per litre to K1 380 while that of diesel jumped from K1 120 per litre to K1 470. On the other hand, the price of paraffin moved from K833.20 per litre to K956.
The adjustments were made after a new Mera board was appointed and subsequently confirmed by the Public Appointments Committee of Parliament. Mera operated without a board following the resignation of the directors on February 27 2022.
Meanwhile, Consumers Association of Malawi (Cama) executive director John Kapito has asked some departments in the public sector that benefit from fuel levies to provide financial reports on the usage of the funds.
Initially, Cama asked Mera to remove three levies from the price build up.
On Sunday, Mera board suspended the Rural Electrification Levy and Energy Regulation Levy to mitigate a higher fuel price increase.
