Tell us how some levies are used

 

Two weeks ago, fuel pump prices expectedly went up in Malawi. It was expected given that our beloved kwacha had just been “floated” and devalued by 49 percent against foreign currencies, most notably the dollar.

 

 

Worth noting as well is the fact that during the price review, the Malawi Energy Regulatory Authority (Mera) adjusted downwards the value of some of the levies. If it were not for the reduction, surely, fuel pump prices could be K100 more expensive per litre. Thanks for the consideration.

 

Fuel levies are a form of non-tax revenue government generates from users, that is, both for diesel and petrol on one hand and those who use paraffin on the other.

 

Currently, our fuel price build-up comprises six levies, namely, Price Stabilisation Fund (PSF), Malawi Bureau of Standards (MBS) cess levy, Energy Regulatory Levy, Road Levy, Storage Levy and Rural Electricification Levy. Following the pump price review, the Safety Net Levy—which used to collect K19 from every litre of diesel and petrol and K4 from each litre of paraffin—has been removed. Previously, it used to be called the Drought Levy to raise funds for mitigating the impact of frequent droughts that hit Malawi then.

 

Now, the value of levies in a litre of petrol has gone down to K86.74 from K228.27 whereas levies in a litre of diesel add up to K82.38, down from K206.83 before and on a litre of paraffin levies make up K34.21, down from K46.02. The major contributing factor to this reduction is the downward revision of the PSF, which protects local consumers from shocks and covers importers’ losses to ensure stability and sanity in pump prices, from K155 to K22 per litre of petrol, K139.94 to K23.42 on each litre of diesel and K27.16 to K9.17 per litre of paraffin.

 

It is good that the Safety Net Levy has been removed in the new price build-up. However, that should not be the end of the story. We need to be told how much was collected in the most recent financial years and indeed how the funds contributed by the public to the Safety Net Account, so to speak, have been used.

 

The same should apply to the Rural Electrification Levy where we should be told total money contributed by fuel users and the rural towns that have benefited to date. In that way, my fellow Malawian in Misuku Hills, Chitipa or Namadidi in Zomba, who uses paraffin, thereby contributing to electricfication through the levy in the price, will be motivated to contribute more in the hope that one day they will have electricity.

 

We need the same transparency that is attached to the Road Levy, which has been increased from K28.70 to K35 per litre of petrol and to K30 from K23.70 per litre of diesel. With the Road Maintenance Levy, we have seen potholes being filled and indeed some new roads constructed. That is beautiful.