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Politics of fuel

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Puludzu

Like fertiliser and drugs, fuel is an imported strategic commodity that must be treated with all the conceivable care in the world.

That is why, during periods of stressed foreign exchange reserves, government will limit importation arrangements to only those concerning these three.

And like fertiliser and drugs, fuel has overarching political undertones in discourses about how government is managing affairs that affect its people.

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That is why a decision to hike fuel prices must be reached after careful consideration and only when necessary. There are certain trends which must be brought into the picture before such decisions are made.

In our case, a board of directors at Malawi Energy Regulatory Authority (Mera) is sanctioned to determine fuel prices after reviewing a number of issues including landed costs and movements in foreign exchange rates.

Without the board, the prices will remain what they are.

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No government is willing to play around with fuel prices because the commodity is a lifeline for several other sectors.

We all saw what happened during the time Bingu wa Mutharika was ruling this country.

We also saw a few months ago when a strike by truck drivers led to a fuel crisis that had to be partially resolved by the deployment of Malawi Defence Force soldiers who drove tankers and provided security on the way to various filling stations.

So, what direction should government take in the current scenario where Mera indicated movements in fuel price determinants would trigger a rise?

Reports indicate that in several countries, fuel prices have broken records and are expected to continue to rise throughout the year.

There are few factors contributing to the sudden increase in the prices, but the main one, according to experts, is the Russian invasion of Ukraine.

It looked so distant to Malawi until it became a global issue and everyone got affected.

The loosening of Covid restrictions around the world is also said to have contributed to the rise in fuel prices as people have become freer to move, creating demand for the commodity.

Some experts are suggesting the worst is yet to come in terms of the prices. In fact, some forecasts predict the average cost of fuel will peak in May after which they may decline.

Perhaps, that is why the Consumers Association of Malawi (Cama) is urging government to raise the prices now than wait for a time the hike will be too much for an average Malawian to bear.

Cama’s reasoning is that as government holds on to the current prices, when elsewhere rises are being effected, it will be forced to increase them to levels which that time will be seen as unreasonable.

The association’s Executive Director John Kapito argues that the reason for clinging to the current price is not economic but political. That makes sense.

In fact, the update from Mera itself in which the energy regulator announced the movements in the fuel market indicated that globally, the prices have been rising since December last year.

Obviously, there should be times to make unpopular decisions even when politics demands otherwise. While government controls the pricing of fuel, there are other oil marketers who get hit if prices do not reflect the reality on the ground.

With threats that the prices of the strategic commodity will continue to rise globally, Cama’s suggestion of gradual rises makes sense.

But then, we do not have a Mera board in place and that is a whole big issue to be considered.

An important decision to raise or maintain the price of fuel can only be made by the board. When we will have one in place is not clear—at least, if what was there when this piece was being drafted is anything to go by.

It may appear and sound nice to motorists to have prices stuck where they are now because that will mean saving a few pennies; but a huge hike at once will be more painful.

Of course, there are also possibilities that prices can be maintained or raised just a little. Some of the factors pushing up fuel prices in Malawi are some levies which should have been scrapped off in moments of crises.

The levies are crucial, for they were introduced to cover other areas, but they can be temporarily suspended for the sake of consumers.

We have the Road, Marep and Malawi Bureau of Standards levies which can be removed for prices to be fair a little for the political expediency that our governors pursue.

All in all, it is important that sufficient attention is paid to fuel issues because this strategic commodity is at the centre of many sectors in Malawi.

There are painful decisions that have to be made and time is of the essence.

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