The Malawi Energy Regulatory Authority (MERA) has announced that it is reviewing fuel pump prices to better align them with the actual landing costs of petroleum products.
This decision comes in response to mounting pressure from various stakeholders, including members of Parliament and the Consumers Association of Malawi (Cama), who have urged for an increase in fuel prices. The goal is to enable MERA to remit necessary levies to government ministries and agencies involved in vital development projects.
Currently, MERA is struggling to remit funds to the Roads Fund Administration (RFA) and the Ministry of Energy, impacting critical initiatives such as the Malawi Rural Electrification Project (Marep). During a recent appearance before the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises, MERA's director of finance, Zacharia Ng'oma, acknowledged that the failure to adjust fuel prices has hindered the government's ability to recover working capital for fuel importers.
"Prices of petroleum products need to be adjusted to reflect the cost of bringing that product into the country," Ng'oma stated, underscoring the urgency of the situation. The lack of adjustment has led to significant losses for fuel importers and has stalled the flow of levies to necessary beneficiaries, prompting MERA to initiate a review of the prices.
As part of this review, MERA has already increased the price of liquefied petroleum gas (LPG) by 15.25%, raising the price from K3,245 to K3,740 per kilogram effective October 16. This adjustment reflects the depreciation of the Malawi kwacha and follows a previous 32% increase last November. Ng'oma indicated that discussions with government authorities are ongoing regarding further price adjustments, particularly for aviation fuel and other products.
RFA Chief Executive Officer Stuart Malata expressed the urgency of unlocking fuel levies to maintain the country's roads, especially with the rainy season approaching. He highlighted the need for timely maintenance to prevent further damage and ensure the safety of transport routes.
Parliamentary Committee chairperson Bintony Kutsaira emphasized that while adjusting fuel prices might burden citizens, it is essential for national progress. He criticized MERA for its delayed decision-making, suggesting that the authority is effectively holding the country "at ransom." Kutsaira pointed out that the stalled Malawi Rural Electrification Project (Marep) has been significantly affected by the non-remittance of levies, totaling approximately K102 billion, which is critical for providing electricity to rural communities.
Committee member Joseph Mwanamvekha questioned why MERA has not utilized the Automatic Pricing Mechanism (APM), which ties pump prices to international price movements and the local currency value. He argued that adherence to APM would have mitigated the current crisis, suggesting that the absence of timely price adjustments has left consumers bearing the burden of artificially low fuel prices.
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As MERA reviews fuel prices in light of current economic pressures and stakeholder demands, the authority faces a challenging balancing act. The need for increased revenue to support essential development projects must be weighed against the potential impact on consumers already grappling with economic hardships. With calls for swift action from both government and civil society, the stakes are high for MERA to ensure that adjustments not only address fiscal requirements but also consider the welfare of Malawians. The coming weeks will be crucial in determining how effectively MERA can navigate this complex landscape.
