Ministries of Trade and Transport and Public Works have cautioned traders and minibus operators against exploiting consumers and commuters by raising prices due to the fuel pump price hike effected yesterday.
In a joint statement yesterday signed by Minister of Trade Sosten Gwengwe and Deputy Minister of Transport and Public Works Nancy Chaola Mdooko, they said both minibus operators and trader s should reasonably respond to the fuel price increase announced by Malawi Ene r g y Regul a tor y Authority (Mera).
Reads the statement in part: “Government will monitor unjust increase in cost of goods, services and works.”
Minibus Owners Association of Malawi general secretary Coaxley Kamange yesterday was non-committal on the association’s plans to adjust upwards minibus fares.
After three months of protecting Malawians from an inevitable fuel price increase without the price stabilisation fund, Mera on Saturday night announced an increase in fuel prices by 22.8 percent.
The increase—the first in six months since March this year—appear c onservative when compared against In Bond Landed Cost (IBLC) for petrol, diesel and kerosene, which rose by 21.13 percent over the past six months.
Announcing the new fuel prices at a press briefing in Lilongwe Mera chief executive officer Henry Kachaje said petrol will now fetch K1 150 from K899.20, representing a 27.89 percent hike.
Diesel is up 24.72 percent from K898 to K1 220 while kerosene will attract 15.79 percent more at K833.20 from K719.60.
But IBLC—made up of free onboard price (FOB), freight, product insurance, handling charges, in-transit losses, and the Malawi kwacha exchange rate—shot by an average 21.13 percent between March and September this year.
FOB prices alone of petrol, diesel, and paraffin jumped by 25 percent just in September, reflecting the rise in global oil prices.
Over the past 12 months, global oil prices have rallied on the back of a back-on-its-feet world economy as Covid-19 infections fall, lockdowns fade and industrial output surges with more people returning to work.
Said Kachaje: “Oil prices dropped at the start of the Covid-19 pandemic. In April last year, they fell below zero for the first time in history as lockdowns wiped out demand while producers continued to pump crude from their wells.
“Demand has been rising in recent months as economies around the world have started to reopen, pushing world oil prices upwards.”
However, Consumers Association of Malawi (Cama) executive director John Kapito said while the increases are justified, Mera should have considered staggering the hikes over a number of months.
He said: “In terms of justification, there is no argument at all. Prices of fuel the world over have been going up for a long time.”
Apart from the retreating Covid-19 pandemic, oil-producing nations under Opec+ have kept supply tight as seen in the stubbornly low production quotas despite rising demand as countries build up stocks, leading to fuel price spikes globally.