Nearly five months after their disappearance, the dreaded long fuel queues have resurfaced in two of the countryâ€™s four cities. First, it was in Mzuzu last week and authorities dismissed the queues owing as a result of logistical bottle necks and that there was â€œno cause for alarm.â€
But no sooner had the Mzuzu long queues disappeared than we saw even longer queues at filling stations in Lilongwe on Monday and Tuesday this week. The Malawi Fuel Watch page on Facebook, which in the past five or so months had become â€˜uselessâ€™, suddenly became useful again, with subscribers updating each other on where to get fuel in the capital city.
Authorities want us to believe there is â€œno cause for alarm.â€ But, they say that once bitten, twice shy. For the record, the fuel droughts the country experienced during the administration of the late president Bingu wa Mutharika had also started as simple â€œlogistical hiccupsâ€ in late 2008 in some parts of the country, notably Lilongwe.
Then, foreign exchange was the major contributing factor to the shortage. Get used we did and long queues were the order of the day. Productive hours were spent on fuel queues.
Suddenly, when the Joyce Banda administration came in following Mutharikaâ€™s death (may his soul rest in peace), the queues started disappearing. The situation normalised to the point that many motorists reverted to filling their tanks with quantities their pockets could afford such as five litres.
To put an end to erratic fuel supply, in June this year the Malawi Energy Regulatory Authority (Mera) unveiled several strategies. First was the plan to have storage facilities to cover up to 60 days instead of the current average 10 days. The storage tanks are yet to be finalised, but the second strategy to mitigate the shortages is already at play and, within three months of its implementation, has annoyed both consumers and fuel retailers alike. It is called the automatic pricing mechanism (APM).
In introducing the APM, Mera said the new system would allow full cost recovery for all fuel imports. In other words, the full burden of the importation of fuel was placed on the consumer.
Under the APM, fuel pump prices are adjusted to reflect fuel price movements on the international oil market to allow fuel importing companies to recover importation costs on real time basis. Pump price adjustments reflect the changes in the value of In Bond Landed Cost (IBLC) of petroleum products and movements of the kwacha against the dollar. Every five percent change in either variable translates into an upward or downward price adjustment. In July, we had a downward adjustment whereas in August and September we had price increases.
Now that petrol is at K539 per litre and diesel at K521.90 per litre, effectively our highest denomination, K1 000 cannot buy two litres! Even K3 000 today is only enough for 5.5 litres of petrol! How things change… Life is unbearable for many Malawians. The shock therapy they are going through is too shocking to be real.
I am not a prophet, but with oil prices on the international market continuing to rise and our beloved kwacha still being battered, I foresee (not prophesying or going deeper) more trouble ahead. One day Malawians will wake up to the shocking reality of buying a litre of petrol at K1 000.
Fuel prices have a cost-push effect such that every time the prices go up, prices of all other goods and services follow suit. Already, we have seen minibus fares going up by 10 percent, yet the commutersâ€™ income is static.
In view of the APM and the shortages in Lilongwe and Mzuzu, I have been thinking aloud on a number of issues. If consumers are paying for the full cost of imports through the APM, what is causing the erratic supply of fuel? Should we say the free market policy adopted for fuel pricing has failed us? Do we need the APM which is disturbing individualsâ€™ and organisationsâ€™ transport planning as they are not sure how much they will pay the next day? If the problem is foreign exchange, what happened to the â€œmillions in forexâ€ we â€œreceivedâ€ from our development partners?
In my view, the APM has created more confusion in the economy to warrant a review. Pricing is very sensitive. One-size-fit-all strategies such as the APM have been tried and tested and found wanting.
It is a fact that the JB administration inherited the problems from the previous regime. But, that is water under the bridge, we need to get a life and move on.
Perhaps this excerpt, from How To Die Without Regrets by Albert Ellis, should inspire us to let the past be history and focus on building the future: â€œThe best years of your life are the ones in which you decide [that] your problems are your own. You do not blame them on your mother [or father], the ecology or the president et al. You realise that you control your own destiny.â€