Devaluation bites, Fuel pump prices hike
Malawians are still facing the plights of the 25% devaluation of the Malawian Currency, Kwacha as the Malawi Energy Regulatory Authority, MERA has on Wednesday evening, announced the adjustment of motor fuels.
Speaking during the press briefing in Lilongwe, MERA Chief Executive Officer, Henry Kachaje said the hike of the fuel is effective Wednesday midnight.
Kachaje attributed the stroll in fuel to a 25 per cent devaluation of the Malawi Kwacha saying it has resulted in a sharp rise in the landed cost of the commodity in Malawi.
According to Kachaje, fuel prices are determined by the exchange rate and free on-board prices.
He said, “Malawi Energy Regulatory Authority, MERA 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.
“The average FBO prices of petrol, diesel and Paraffin increased in May 2022 by 13.80%, 6.0% and 5.0%, respectively when compared to FBO prices which were applied when determining pump prices in April 2022.
“Oil price maintained an upward trend due to fears of security of supply following the invasion of Ukraine by Russia, Economics have resorted to stock building in fear of supply disruption from the wall, Russia being one of the largest oil producers and under trade sanctions.
“Since the last In Bond Landed Cost (IBLC) review in 2021 when pump prices were last revised, Malawi Kwacha has depreciated by 25% trading at K1031.25 against US Dollar. This followed the alignment of the exchange rate to the parallel market rate announced by the Reserve Bank of Malawi on May 26, 2022.
” MERA assessed the combined effects of the movement of the FBO prices, the exchange rate of Malawi Kwacha to UD Dollar, and changes in local factors that determine the maximum pump prices on the Landed Cost of Petroleum products.
“MERA has there resolved to adjust upwards pump prices of petrol, diesel and paraffin.”
The adjustment saw petrol’s price rising by 44.92%. Before adjustment, Petrol was being sold at K1,380 but effective June 23, Petrol will be at K1900.00.
Diesel has trekked with 30.61%, which means that Diesel is being sold at K1,920.00 from K1,470.00.
Paraffin effectively the said date, will be peddled at K1,236.00 from K956.00 which represents 29.29%.
“According to Automatic Pricing Mechanism (APM), all the three products qualified for an upward adjustment since the changes in their landed cost existed beyond the plus negative 5% trigger limit,” added Kachaje.
Kachaje ascertained the public that when Kwacha Stabilizes, things will get back to ordinary.
