Fuel prices saved by Price Stabilisation Fund

The Malawi Energy Regulator Authority (Mera) Board of Directors has said it has decided against hiking the country’s fuel prices despite the commodity qualifying for an upward adjustment under the Automatic Pricing Mechanism (APM).

Mera has since resorted to use money in the price stabilisation fund (PSF) to cushion the local fuel prices.

In a statement on Saturday, Mera board Chairman, Joseph Bvumbwe, said on the international market the average FOB price of petrol, diesel and paraffin increased when compared to the averages obtained in the month of October 2016 used in determining the ruling pump prices.

Bvumbwe said the FOB price of petrol, diesel and paraffin increased by 9.74 percent, 9.24 percent and 8.80 percent, respectively, in February 2017.

He added that since the last review of the In Bond Landed Cost (IBLC) of petroleum products in November 2016, the Malawi kwacha has remained stable trading at K733.50 against the United States Dollar as noted on 6th March 2017.

Bvumbwe said the combined effect of movements of the FOB prices and the exchange rate of the Malawi kwacha to the US Dollar noted in March 2017, has resulted in increases of landed cost of Petrol, Diesel and Paraffin by 12.27 percent, 15.33 percent and 16.11 percent respectively.

“The change in the landed cost qualified all the three products for an upward pump price adjustment.

“The Mera Board considered the accumulated PSF balance in February 2017 and the fuel trading gains realised from switching back volumes from the alternative supply routes to the normal routes and volumes which are less expensive and have resulted in a reduction on the landed costs of petroleum products.

“The board has therefore resolved to maintain fuel pump price by covering in full IBLC increases through use of the Price Stabilization Fund,” said Bvumbwe. Following the development, petrol price remains at K824.70 per litre while the price of a litre of diesel remains at K815.80. Paraffin which is commonly used as a source if energy for the poorest of the poor remains at K648.70 per litre.