* Our members feel their patience has been stretched to the limit and are now threatening drastic action
* For being forced to continue bearing such a heavy burden of business capitalization with a continued depreciation of returns
* The fuel price adjustment on Sunday resulted in a further erosion of the retailers margin by 17.67% for petrol and 25.15% for diesel
* As a consequence of maintaining a fixed margin of K78.44 per liter for both products
By Duncan Mlanjira
Petroleum Retailers Association demanded a meeting with Malawi Energy Regulatory Authority (MERA) to negotiate that their profit margin be adjusted to 10% as requested last year — which after the price adjustment made on Sunday, April 10 — has been reduced to 6.02%.
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In a statement from the association’s chairperson, Happy Jere dated Monday, April 10 had asked for the urgent meeting which they demanded for Tuesday, April 12, in which they indicated that if their concerns are not addressed, its members “feel their patience has been stretched to the limit and are now threatening drastic action for being forced to continue bearing such a heavy burden of business capitalization with a continued depreciation of returns”.
They indicated that the fuel price adjustment made on Sunday, “resulted in a further erosion of the retailers margin by 17.67% for petrol and 25.15% for diesel as a consequence of maintaining a fixed margin of K78.44 per liter for both products”.
“This development is coming despite our long engagement with you on the need to revise retailers margin and your assurances that you would be addressing the matter.
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“Our membership is at a loss and is failing to understand the rationale and reasons why the Authority continues to ignore this matter and as a result they are agitating for a serious action of this serious concern is not addressed as soon as possible.”
Jere reminds MERA, which now has a new board of directors led by chairperson Reckford Kampanje, that in their correspondence to the Authority on October 25, 2021 — which happened soon after the massive price adjustment of 27.89% on petrol and 24.72% on diesel — the association “demonstrated how the retailing business continues to be adversely affected through this continued trend of reducing retail margin percentage with every price adjustment and the negative effect this is having on retail business capitalization”.
The statement indicated that as at May 2021, a 40,000 litre truckload of petrol cost K24,482,400 and the margin was K78.44 per litre giving a percentage margin of 12.81% but now the same truckload is costing K52,050,000 with the percentage margin reduced to 6.02% — the same applying for diesel.
The association also appended a table of the trends that that was illustrated “the heavy burden the retailers are being forced to bear at every upward price adjustment,” adding that the capital requirements have increased tremendously against a corresponding sharp decline in margin as a percentage”.
“Our members have received this price adjustment of 10th April, 2022 with deep regret and feel deeply let down. They would like the Authority to quickly reconsider its decision and immediately adjust the margin to the previously requested 10%.
Thus their call for the meeting to discuss the development as a topic of urgency before matters get out of hand — which we were not able to confirm if it took place.
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