By Wezzie Gausi:
The Malawi Energy Regulatory Authority (Mera) Board’s decision to maintain the price of diesel, despite that the commodity qualified for price revision, has not gone down well with the Consumers Association of Malawi (Cama).
According to the Automatic Pricing Mechanism (APM), diesel qualifies for a price revision since the change in the landed cost is above the ±5 percent band.
On the other hand, petrol and kerosene do not qualify since the change in landed costs are within the ±5 percent band.
Mera Board Chairperson Reckford Kampanje indicates, in a statement, that they have resolved to maintain pump prices in the month of November 2022, as implemented on September 15 2022, until the next review in December 2022, when the projected importation losses shall be assessed and considered for recovery.
The statement further says Mera assessed the combined effect of the movement of Free on Board (FOB) prices, the exchange rate of the Kwacha against the United States Dollar and changes in local factors that determine the maximum pump prices on the landed cost of petroleum products.
“Since the last In Bond Landed Cost review in September 2022 for petrol and June 2022 for diesel and paraffin, the Malawi Kwacha official exchange rate has remained stable, trading at K1, 036.25 against the United States Dollar.
“The average Free on Board prices of petrol, diesel, and paraffin (kerosene) decreased by 5.21 percent, 8.74 percent and 12.16 percent, respectively, in the month of October 2022 when compared to the average prices obtained in the month of August 2022 for petrol and May 2022 for diesel and paraffin, used in determining the ruling pump prices,” the statement reads.
However, Cama Executive Director John Kapito has blamed the Mera Board for making a decision that “does not make economic sense”.
He said there is no way Mera officials can think of subsidising fuel when the nation imports the product.
“This is what has led this nation to reach where we are now. There is no way Mera can suppress the price adjustment when the price has gone up. Where will Mera get the other money to buy the product again?
“What is happening is political gimmicks which are destroying this nation. We understand Mera is worried that fuel is not available in the country and increasing the price will cause trouble. But price adjustment was the way to go as that is how it [the issue] is supposed to be [handled],” Kapito said.
Long fuel queues and dry pumps have resurfaced in Malawi’s administrative capital, Lilongwe, barely a week after the situation improved.
This is also the case in the administrative cities of Mzuzu, Blantyre and Zomba.
The problem comes at a time Mera and National Oil Company of Malawi officials have been promising that things will improve.