Malawi Energy Regulator Maintains Fuel, Electricity Prices

12 September 2019

The Malawi Energy Regulatory Authority (MERA) has maintained fuel prices despite an increase in the landing cost of the petrol, diesel and paraffin by 11.70 percent, 7.30 percent and 4.64 percent, respectively.

A statement on the review of prices of petrol, diesel and paraffin in the month of September, 2019 issued on Tuesday signed by MERA's Board Chairperson, Reverend Dr Joseph Bvumbwe and Chief Executive Officer, Collins Magalasi said.

"MERA has assessed the combined effect of the movement of the Freight On Board (FOB) prices and exchange rate of the Kwacha to the United States Dollar as well as changes in local factors that determine the maximum pump prices and noted that the landed costs of petrol, diesel and paraffin increased.

"The changes in the landed costs qualified petrol and diesel for a price revision since the changes in the landed costs were beyond the ±5 percent trigger limit and vice versa for paraffin," reads the statement in part.

MERA, however, said that the Board resolved to cushion the impact of the increased landed cost of petrol and diesel beyond ±5 percent trigger limit through the Price Stabilization Fund.

"The fuel pump prices have therefore been maintained as implemented on 12th January, 2019 where petrol is selling at K868.00, diesel K874.00 while paraffin is going at K710.50

"All operators are required to sell petroleum products at prices not exceeding the above maximum pump prices," said MERA.

In a similar development, MERA Board has also maintained the electricity tariffs at the current average of K88.02/kWh.

"MERA noted that as at October 2018, the last time electricity tariffs were revised following the implementation of the third base tariff for the period 2018 to 2022, the exchange rate was at K735.50/US$ while inflation was at 9.3 percent.

"Since then, the economic fundamentals have relatively remained stable, with the Kwacha depreciating marginally to K742.74/US$, while inflation has eased down to 9.3 percent as noted in July, 2019," reads a separate statement on the review of ESCOM tariffs under the Automatic Tariff Adjustment Formula (ATAF) issued on Tuesday.

MERA said applying the above levels of economic fundamentals to the automatic tariff adjustment formula (ATAF), results into a 0.79 percent potential upward tariff adjustment.

"On the basis of ATAF principles, the Board resolved to maintain tariffs at the current average of K88.02/kWh as the ATAF outcome is within the ±5 percent statutory trigger band," said the energy regulatory body.

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