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Mera raises fuel prices

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Prices for fuels have been raised by as much as 4.62 percent for petrol and 6.38 for diesel and paraffin, which has raised fears it could spark price hikes of transport and goods.

In a statement announcing the adjustments on Thursday, the Malawi Energy Regulatory Authority (Mera) it “considered recent trends in the world petroleum products prices and changes in other macroeconomic fundamentals in the local market and their impact on energy prices”.

Petrol has moved from K788.30 to K824.70, while diesel and paraffin have been adjusted from K766.90 and K609.80 to K815.80 and K648.70 respectively.

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Mera justified decision by saying that the combined effect of rising costs of freight on board (FOB) for petrol, diesel and paraffin and exchange rate movement had informed its decision to adjust the pump prices.

“The FOB price of petrol, diesel and paraffin increased by 3.24%, 12.52% and 11.41% respectively in the month of October, 2016 when compared to FOB prices obtained in May, 2016,” reads the statement, which has been signed by Mera Chairperson Rev Joseph Bvumbwe.

It goes further to observed that the Malawi kwacha had depreciated further by 2.05 percent since the last review of the fuel prices in June 2016. The kwacha was trading at K715 to a dollar compared to K729.63 at the time of the current review.

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Reads the statement: “The combined effect of the movement of the FOB prices and exchange rate of the Malawi kwacha to the US dollar has resulted in increases in the landed cost of petrol, diesel and paraffin by 11.02 percent, 18.66 percent and 16.37 percent respectively.

“According to the automatic fuel pricing mechanism, all the three products qualify for an upward price revision since the changes in the landed costs are beyond the ±5 percent trigger limit.

“However, the Mera board has resolved to pass on only 50 percent of increases in the landed costs on the pump price and further resolved that the remaining 50 percent of IBLC [in bond landed cost] increase be absorbed through the price stabilisation fund to cushion consumers from the impact of the increases in the landed cost of petroleum product.”

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