BACKGROUND

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.

PETROLEUM PRODUCTS INTERNATIONAL PRICES

The average FOB prices of petrol, diesel and paraffin increased in the month of June 2020 by 111.93%, 77.1% and 155.32%, respectively when compared to the average prices which were applied when determining the ruling prices. The increase in the FOB prices on the international market is attributed to output cuts by the OPEC+, and increased demand of oil following the easing of COVID-19 lockdown restrictions in consuming countries.

EXCHANGE RATE MOVEMENT

Since the last In Bond Landed Cost (IBLC) review in May 2020, when pump prices were last revised, the Malawi Kwacha has slightly depreciated trading at K744.49/US$ from K743.43/US$, representing a loss in value by 0.10%.

PUMP PRICES 

MERA assessed the combined effect of the movement of the FOB prices and exchange rate of the Malawi Kwacha to the United States Dollar as well as changes in local factors that determine the maximum pump prices. It was noted that the landed costs of petrol, diesel and paraffin increased by 44.89%, 28.69% and 51.04%, respectively.

Therefore, in line with the Automatic Pricing Mechanism (APM) all the three products qualified for an upward price adjustment since the changes in their landed costs were beyond the ±5% trigger limit.

However, the MERA Board resolved to maintain pump prices at the current levels and that any anticipated importation loses by the fuel importers will be covered by the Price Stabilization Fund. Therefore, fuel pump prices remain as follows:     

Petro

ProductRuling Pump prices in MWK/litre
Petrol690.50
Diesel664.80
Kerosene441.70

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

Signed

Rt. Rev. Dr. J.P. Bvumbwe                            Dr. Collins Magalasi

BOARD CHAIRPERSON                                      CHIEF EXECUTIVE OFFICER

9th JULY 2020                                                  9th JULY 2020