Filling station owners have expressed shock over the erosion of retailers’ margins following last Saturday’s fuel price hike by the Malawi Energy Regulatory Authority (Mera).
The filling station operators have, through the Petroleum Retailers Association, since threatened to take drastic action for being forced to continue bearing a heavy burden of business capitalisation with continued depreciation of returns.
On Saturday midnight, Mera announced a 22 percent fuel price hike which saw the price of diesel jumping from K1,120 to K1,470.
The hike also saw the price of petrol leaping from K1,150 to K1380
But Mera maintained a fixed retailer’s margin of K78.44 per litre for both petrol and diesel.
And, in a letter to Mera Chief Executive Officer Henry Kachaje dated April 11 2022, the fuel retailers say the hike has eroded their margins on petrol by 17.67 percent and on diesel by 25.15 percent.
“This development is coming despite our long engagement with you on the need to revise the retailers’ margins and your assurance that you would be addressing the matter.
“Please be informed that our membership is at a loss and is failing to understand the rationale and reasons why the authority continues to ignore this matter and as a result they are now agitating for serious actions if this serious concern is not addressed as soon as possible,” reads a letter signed by Petroleum Retailers Association Chairperson Happy Jere.
According to Jere, the association told Mera, through a letter dated October 25 2021, that the retailing business continues to be affected through the continued trend of reducing retail margin percentages with every price adjustment.
“For instance, as at May 2021, a 40,000 litres truckload of petrol cost K24,482,400 and the margin was K78.44 per litre giving a percentage margin of 12.81 percent. Today, the same truckload is costing K52,060,000 with the percent margin reduced to 6.02 percent. The same is true for diesel.
“Our members have received the price adjustment of 10 April 2022 with deep regret and feel let down. They would like Mera to quickly reconsider its decision and immediately adjust the margin to the previously requested 10 percent,” the letter reads.
In an interview on Tuesday, Mera spokesperson Fitina Khonje said her organisation had received the letter and would engage the retailers.
She said Mera’s work is about balancing the interests of both consumers and licencees.
“The retail margin has been maintained. However, indeed, in percentage terms, the margin has declined.
“Their request for a margin adjustment could be an indicator that the cost of doing business has increased. Mera will engage the retailers and map the way forward based on a model that was already agreed upon,” Khonje said.