Malawi Energy Regulatory Authority (Mera) has adjusted upwards the wholesale margins for Oil Marketing Companies (OMCs) and the maximum recommended retail price for liquid petroleum gases (LPG).
In a statement issued on Friday signed by board chairperson Dingiswayo Jere, Mera has, however, maintained fuel pump prices because the combined effect of the movement of the Free on Board [FoB] prices and exchange rate of the kwacha against the dollar has resulted in changes of the landed cost of petrol, diesel and paraffin by 3.79 percent, -4.96 percent and -4.68 percent respectively.
Mera said in view of the automatic fuel pricing mechanism, all the three products did not qualify for a price adjustment since their respective landed costs changes were within the plus or minus five thresholds.
This means that prices will be maintained at K711.90 (about $1.05) per litre for petrol, K732.70 (about $1.08) per litre diesel and K573.10 (about $0.84) per litre paraffin.
On the margins for OMCs, the statement said they were revised upwards from K38.67 to K46.45 per litre on petrol, diesel and paraffin while the distribution margin for deliveries beyond a radius of 10 kilometres (km) has since been revised downwards from K46.45 to K38.67 per litre.
The wholesale margin for the LPG has since been revised from K392.78 to K409.18 per kilogramme (kg) while the distribution margin has been revised to K136.47 per kg and K169.02 per kg for distances within 150 km and beyond 150 km respectively.
On the fuel prices, Mera said: “Since the last review of the In Bond Landed Cost (IBLC) of petroleum products on 5 December 2015, the Malawi Kwacha has depriciated by 10.51 percent against the United States [US] dollar trading at K676.77 per US dollar as at 4 January 2016 from K612.38 per US dollar noted in December 2015,” reads the statement in part.
The statement, however, said the average FoB prices for petrol, diesel and parafin dropped significantly in December by 6.78 percent, 19.83 percent and 18.29 percent respectively due to continued over supply of oil on the global market.
On LPG, Mera said since the last review in September 2015, the kwacha has slighlty depreciated against the Soutrh African rand from K42.48 to K43.93, representing 3.48 percent loss in value.
The statement said the current maximum LPG retail price is K1 797.14 per kg while the recommend maximum price now stands at K1 875.98 per kg, representing a 4.4 percent change.
According to Mera, the distribution margin was introduced in the price build up of petroleum products to incentivise and compensate OMCs who were distributing petroleum products beyond an agreed radius from their operating depots and covered more distances to reach the rural areas.
Recently, President Peter Mutharika approved implementation of various reforms within the liquid fuels and gas sub-sector which include the transfer of the distribution fund and introduction of the fuel bulk procurement system for Malawi.