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 November 2020 by 123.66%, 81.38% and 185.02%, 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+ producer Alliance which have reduced the global supply glut, and increased demand of oil following the easing of COVID-19 lockdown restrictions in some 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 depreciated trading at K768.81/US$ from K743.43/US$, representing a loss in value by 3.41%.

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 65.91%, 42.39% and 62.32%, respectively. According to 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. 

Therefore, the MERA Board resolved to revise upwards pump prices of petrol, diesel and paraffin effective 17th December, 2020. The revised pump prices are as follows:    

Product Ruling Pump prices in MWK/litre Recommended pump prices % Change
Petrol 690.50 834.60 20.87
Diesel 664.80 826.40 24.31
Kerosene 441.70 613.20      38.83

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

Signed

Leonard Chikadya

BOARD CHAIRPERSON

DECEMBER 2020