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Record low oil prices bring hope to Malawi

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Glimmer of Hope. That is the feeling among most Malawians following reports that international oil prices continue to tumble, sinking to negative figures in the United States.

On Monday US oil turned negative for the first time in history meaning that oil producers were paying buyers to take the commodity off their hands over fears that storage capacity could run out in May.

The BBC reported Tuesday that demand for oil has dried up as lockdowns across the world have kept people inside.

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Random interviews conducted in Lilongwe Tuesday indicated that Malawians have strong hopes that Malawi would benefit from such rock bottom oil prices which could trickle down to consumers in a form of falling consumer prices.

Gideon Phiri, an accountant in Lilongwe said chances are high that the local oil prices could sink below the K500 mark as suppliers are getting for a song.

“That could provide a huge relief for the Malawi economy which is currently struggling in the wake of Covid-19. If authorities decide to pass the full effect of the falling oil prices to consumers, then the impact of Covid-19 on the poorest of the poor could be minimised,” Phiri said.

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Another resident of Lilongwe, Martin Phoso, said the recent fall in oil international is huge, adding that one could not be faulted to expect that it would trigger a corresponding significant reaction from the local authorities.

Early this month the Malawi Energy Regulatory Authority Mera reduced prices of petrol by 16.13 percent, diesel by 13. 17 percent and paraffin by 9.71 percent respectively.

Mera Chief Executive Officer, Collins Magalasi, Tuesday said the negative prices recorded in the US were just temporary, adding that Malawi gets its oil from the Gulf and Asian region.

Magalasi, however, said even in the gulf and Asian region, the oil prices have declined sharply, hovering around $23 per barrel.

He said, if things remain the same, prospects of a further reduction in local fuel prices look good.

“It is, therefore, not wrong to anticipate that the falling oil prices could impact local fuel prices in the months to come.

“As Mera, as has always been the case, we will consider the changes in international oil prices and decide the appropriate local fuel prices during our meetings,” Magalasi said.

Vice President, Saulos Chilima, early this month said in the Covid-19 crisis, it is important for the government to take care of its citizens.

“Taking into account the fall in the landed price of petroleum products and also taking into account that the exchange rate remains stable for now, I am calling on Mera to further reduce the price by passing all the decrease in landing cost to consumers at least for this period until the Covid-19 and its effect on economy and livelihoods subside,” Chilima said.

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