Fuel Shortage Comes Back to Malawi

By Burnett Munthali…….

Malawi Energy Regulatory Authority (MERA) has admitted that there is shortage of petrol in some parts of the country.

Many filling stations in Lilongwe were still dry without any fuel as observed on the morning Tuesday 2 May 2023.

The major short-run impacts of any of the oil shortage scenarios include a reduction in GNP, increases in prices and interest rates, and a reduction in petroleum product supply, which drives prices up. Automobile sales and housing construction are the two sectors most severely affected.

The 23 percent shortage produces a recession. The major short-run impacts of any of the oil shortage scenarios include a reduction in GNP, increases in prices and interest rates, and a reduction in petroleum product supply, which drives prices up.

There are many challenges that come as a result of fuel shortage. Some possible effects of a fuel shortage include supply chain delays and breakdowns. Increasing business costs – higher gas and fuel prices. Inability to fulfil customer needs – for example., lack of fuel limiting your ability to deliver goods ordered.

There’s a reason why fuel is missing in Malawi. The scarcity of fuel in Malawi is largely attributed to a shortage of foreign exchange, especially U.S. dollars. The shortage has forced Malawi’s drivers to wait hours in line, sometimes overnight, or to purchase fuel illegally smuggled in from Mozambique.

Fuel is very important in the economy. It is an important input for transportation, which directly impacts households as they drive, but also businesses that rely on logistics and transportation chains around the globe. If discretionary spending is hampered by higher gasoline costs, it can have knock-on effects throughout the broader economy.

There’s one industry which drives the Malawi Economy. Agriculture is the mainstay of Malawi’s economy, accounting for more than one-third of GDP, main exports include tobacco, tea, sugar, cotton, rice, groundnuts, textiles and apparels.

Fuel consumption of Malawi, according to vehicle population is at 30 million liters/ month of both petrol and diesel.

The average value for Malawi during that period was 1.62 thousand barrels per day with a minimum of 0.74 thousand barrels per day in 1984 and a maximum of 3.8 thousand barrels per day in 2019. The latest value from 2019 is 3.8 thousand barrels per day.

Gasoline do average prices per litre, for Malawi from 16-Jan-2023 to 24-Apr-2023 during that period was 1,746.00 Malawian Kwacha with a minimum of 1,746.00 Malawian Kwacha on 16-Jan-2023 and a maximum of 1,746.00 Malawian Kwacha on 24-Apr-2023.

However, fuel prices at the black market due to the shortage, had risen to K4000 and in some cases K5000 per liter.

Diesel prices for Malawi from 26-Dec-2022 to 03-Apr-2023 during that period was 1,920.00 Malawian Kwacha with a minimum of 1,920.00 Malawian Kwacha on 26-Dec-2022 and a maximum of 1,920.00 Malawian Kwacha on 03-Apr-2023.