Petrol adjusted to K1,380/ltr from K1,150; Diesel at 1,470 from K1,120

* This follows recent trends in the world petroleum products prices

* And changes in other macroeconomic fundamentals in the local market and their impact on energy prices

* Oil prices continue to skyrocket due to fears of security of supply following the invasion of Ukraine by Russia

By Duncan Mlanjira

Effective today, April 10, petrol price has been raised by 20% from K1,150 per litre to K1,380 while diesel is at K1,470 per litre — up from K1,120 representing a 31.25% increase.

Paraffin has also been adjusted by 14.74% from K833.20 to K956 per litre, as according to a statement from the recently appointed Malawi Energy Regulatory Authority (MERA) Board of Directors — led by chairperson Reckford Kampanje.

The Board says this follows its assessment of the impact of Free on Board (FOB) price and exchange rate movements on the landed cost of petroleum products into the country.

The Board also “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” and that petroleum prices “continue to skyrocket due to fears of security of supply following the invasion of Ukraine by Russia.”

The previous prices were set last October in which petrol went up to K1,150/ltr from K899.20, diesel from K899.00 to K1,120/ltr and paraffin at K833.20/ltr from K719.60.

Just last week, amid calls from various stakeholders for the government to consider increasing oil prices, Minister of Information, Gospel Kazako said government would not be pushed to do so saying there are other critical issues to be considered first before taking that course.

Kazako had also acknowledged that prices will nonetheless be hiked but will not be because other sections of the public have made  recommendations.

Calls for speedy fuel hikes have been coming from the opposition Democratic Progressive Party, Consumers Association of Malawi (CAMA) and Malawi Commerce of Chambers and Industry, among others.

CAMA criticized the government last month for holding fuel price increase despite the law or regulations demanding MERA to do so once they are above or below 5% threshold.

In a press statement issued on March 10, CAMA had said prices of fuel in Malawi have been going up since last December and MERA decided to holding increases.

CAMA had argued that the failure to adjust prices of fuel resulted in the depletion of the Price Stabilization Fund (PSF) that affected oil marketers to incur huge losses.

CAMA had also advised Government to remove some levies on the price buildup such as Road, Malawi Rural Electrification (MAREP) and Malawi Bureau of Standards (MBS) CESS, saying once removed the three levies could assist to have reduced fuel pump prices.

In a statement, CAMA issued to Clerk of Parliament to consider reviewing the many levies that are added on the fuel prices, it argued that if removed could lead the price of petrol at around K950.00 per litre and diesel at K931.00 per litre.

CAMA Executive Director, John Kapito had argued that the Road levy was introduced some years back to assist in the construction and rehabilitation of roads and at a time when systems and mechanisms were not established within relevant institutions.

But now, the government constituted a full Road Regulatory Authority with specific objective for road construction and rehabilitation and thus the suggestion that it be transferred to this appropriate authority.

He said Road Authority has introduced the Toll Gate Tax whose purpose is similar to that of the Road Levy and “it is unfair to punish Consumers with double taxation for the same type of service or product.”

For the MAREP levy, CAMA observed that it has been part of the Petroleum Price Build up for a long time, which was intended to develop rural electricity connection infrastructure with hope to improve rural electricity access.

Kapito had argued: “This is also one tax or levy that is loaded on a wrong and sensitive product like fuel and we are proposing if this tax is moved to taxes under electricity distribution or generation.”

For the MBS CESS, CAMA argued that it is “another levy loaded on fuel prices and intended to provide quality assurance of our fuel” but then “it is common sense that the quality of Petroleum Products can only be inspected and assured before shipment” — therefore, the role of MBS to inspect and assure quality of fuel into the country is redundant.

“For years Consumers have been paying a tax to an institution that contributes nothing or plays no role in fuel quality assurance. It is unfair to punish Consumers to a levy that cannot be justified. The only thing this levy does is to distort market prices,” Kapito had argued.