Malawi Energy and Regulatory Authority (Mera) has said while crude oil prices on the global market are projected to rise by 26 percent in the first quarter (January to March) of 2017, local pump prices will be determined based on the changes from the last assessment.
Mera’s pronouncements follow forecasts by the World Bank in its January 2017 Commodity Markets Outlook (CMO), which projects that crude oil prices will rise by 29 percent to $55 (K40 150) per barrel.
This follows agreements among some Organisation of the Petroleum Exporting Countries (Opec) producers and non-Opec producers to limit output by nearly 1.8 million barrels per day in the first half of 2017.
According to Opec communiqué, the main intent for curtailing output is to reduce the large overhang of inventories.
In Opec’s view, rebalancing was not proceeding quickly enough, particularly on the supply side, because non- Opec producers had reduced costs, improved efficiency and sustained output at higher-than-expected levels.
The agreement resulted in crude oil prices jumping 10 percent in the fourth quarter of 2016, averaging $49.1 per barrel.
During the same period in November 2016, Mera adjusted upwards fuel prices.
In an interview on Friday, Mera spokesperson Fitina Khonje said the energy regulatory body respects the projections, but it is difficult to say whether fuel prices will rise or not.
She said: “We respect these projections. However, how we work is according to actions and our assessment is based on the change that has happened from the last time we made reviews.
“We work based on actions that is why we cannot say whether fuel prices will rise or not because a rise in fuel prices is not only necessitated by the changes on the international market, but also how the kwacha is fairing.”
Senior economist and lead author of CMO, John Baffes, said prices for most commodities appear to have bottomed out last year and are on track to climb in 2017, but added that changes in policies could alter this path.
According to the report, agricultural produce prices are expected to rise by less than one percent in 2017 with small increases anticipated for oils and oilseeds and raw materials while grain prices are forecast to drop almost three percent on improved supply outlook.
In a separate interview, Grain Traders Association of Malawi president Grace Mhango said they expect a fall in the prices of grains, especially maize due to oversupply on the market.
“We had a lot of maize inflow between October and November, but many traders are still holding the maize because the donation of humanitarian food assistance has affected our sales.”
The report shows that exporting and developing economies have been hit hard by slowing investment growth, which has declined to around 1.6 percent. n