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Mera contemplates fuel price adjustment

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The Malawi Energy Regulatory Authority (Mera) on Tuesday said it was considering adjusting prices of fuel in line with movements on the international market and the Kwacha volatility.

But Consumers Association of Malawi (Cama) has since warned of a possible rise in price of the commodity, saying trends point to an upward adjustment.

In the statement, Mera says the recent trends in the exchange rate and Free on Board prices of refined petroleum products on the international market triggered a 20.4 percent increase on the landed cost of petrol and a 12 percent increase on diesel.

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This hints that the regulatory authority may increase prices of fuel soon because it uses the Automatic Pricing Mechanism (APM) which dictates that prices are adjusted when the change in the landed cost is beyond the negative or positive 5 percent trigger band.

In an interview Wednesday, Cama chief John Kapito said the fuel increases should have been implemented gradually, as a possible one-off increase will hurt the whole economy and trigger the market to react.

He added that international oil prices are also going up continuously because Europe and other markets will see the demand for petroleum products increase.

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“The demand for petroleum products will be too high and, as this happens, prices will go up and we will be hit hard as a country, already the Kwacha is getting weaker, and we are going towards lean period, which will make the Kwacha even weaker. The outlook is so bad for Malawi, and consumers should brace up for untold miseries,” Kapito said.

Economics Association of Malawi Executive Director Frank Chikuta said the depreciation of the local unit is likely to continue until after the first quarter of 2022.

Mera is mandated to regulate the energy sector in the country, and the board plans to consider the changes in landed costs and other economic factors in order to establish prices of the petroleum products moving forward.

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