Mera upbeat on Malawi fuel’s steady supply
At a time the kwacha is fast depreciating, bringing fears that fuel prices will continue to rise in the coming months, Malawi Energy Regulatory Authority (Mera) has assured of security of supply of the commodity on the market.
The energy regulator, which last Friday hiked the price of fuel by about 7.2 percent, said the country continues to enjoy uninterrupted fuel supplies, stressing there was no need for panic as internal as well as external stockholding of petroleum products are adequate.
“There are adequate financing mechanisms for Malawi’s fuel needs. The public should ignore all speculative actions that would portray that Malawi does not have enough fuel supplies,” said Lyton Zinyemba, Mera chairperson.
Mera raised the price of petrol to K856.70 ($1.86) per litre whereas diesel, used mainly by businesses, is now selling at K865.70 ($1.88) per litre from K805.50 ($1.75) per litre.
The authority has attributed the raise to the movement of international exchange rate of kwacha against the dollar.
Mera considers the trends in the world petroleum products’ prices and changes in other macroeconomic fundamentals in the local market and their impact on energy prices before coming up with pump price hike.
Since the last review of the In Bond Landed Cost (IBLC) of petroleum products on September 2 2014, the Malawi kwacha was trading at K435 to the dollar as noted on October 6 2014.
Currently, the kwacha is trading at around K500 to a dollar, according to rates from authorised dealer banks (ADBs).
Reserve Bank of Malawi (RBM) figures show that gross official reserves, held by the central bank to prop up the kwacha when need arises, are decreasing and are now at $418.59 million, an equivalent of 2.19 months of import cover.
On the other hand, private sector reserves—a combination of ADBs own forex and Foreign Currency Denominated Account (FCDA) balances—are at $322.43 million, representing 1.96 months of import cover.
The current import cover calculating figure for a month is $191 million.
Monetary economists argue that a country such as Malawi needs about three months of import cover, about $573 million, to ensure seamless flow of imports.
Mera said necessary measures are in place to ensure that there is seamless inflow of fuel products into the country over and beyond the upcoming Christmas festivities.
