CDEDI  faults Chakwera’s poor administrative decision for recent fuel price hike

The Centre for Democracy and Economic Development Initiatives (CDEDI) has alleged that the recent increase in fuel prices is a result of the poor administrative decision President Lazarus Chakwera made to fire the whole Malawi Energy Regulatory Authority (MERA) Board.

Namiwa and Cdedi officials

CDEDI executive director Sylvester Namiwa argues that the dismissal of all the board members was in disregard of MERA Act, which states that half of the board should always remain whenever there are any changes in board in order to ensure continuity due to the institutional memory the board or directors have.

Namiwa told Nyasa Times on Friday that the wholesome firing of the board members created a vacuum in the authorization of the Price Stabilization Fund to cushion the losses that were incurred before the first fuel price adjustment in January 2021, a development that led to about 38 percent increase.

Earlier, CDEDI issued a statement titled “Bad Governance, Unjustifiable Levies, Power-play at NOCMA Squeezing Malawians Between A Rock And A Hard Place” in which it raises concerns over the recent hike in fuel prices.

Namiwa said they were shocked to note that the Tonse Alliance-led government decided to raise fuel pump price twice within a space of three months.

“The fuel price hike shocked Malawians since it is happening at a time when the economic wheels are turning at a snail’s pace due to the advent of the Covid-19 pandemic. It is worth noting right at the onset, that any upward increase in fuel pump price means an outright increase in the prices for essential services and basic products including food, transport and rentals. Secondly, it should also be made clear that fuel, which drives the country’s economy, is an imported commodity,” he said.

Namiwa claimed that CDEDI investigated the cause of the hike in fuel prices to find out if they were any different from the two usual suspects, which are depreciation of the kwacha and changes in oil prices on the international markets.

CDEDI further observes an apparent lack of clear coordination between the Reserve Bank of Malawi (RBM) and MERA, since locally, fuel prices are affected by the exchange rate and the inflation.

And Namiwa claims this can partly be attributed to the firing of the whole RBM Board of Directors by the current administration, leaving the RMB and MERA cluelessness on how the fuel price situation can be handled.

On fuel levies, the CDEDI boss said they are in agreement with some of the contents contained in the Consumers Association of Malawi (CAMA) statement dated January 26, 2021, which attributed the high pump price in Malawi to levies.

“True, the current pump price contains seven levies, some of which, we believe, it is high time they were either revised or totally scrapped off in order to relieve the consumers of the burden they are shouldering. For starters, the seven levies include; MERA, Roads, Malawi Bureau of Standards (MBS), Rural Electrification, Price Stabilization, Storage, and MERA Complex construction levy. CDEDI’s investigations have shown that the construction of MERA complex in City Center, in Lilongwe is now completed. Therefore, there is no justification whatsoever to continue burdening the consumers with the K4.50 per litre of the 40-50 million litres Malawi uses per month the construction work that has already been completed,” said Namiwa.

He further disclosed that their investigations discovered that the procurement of the fuel testing van at MERA meant the outright abolishment of the MBS levy, just like the way the maize levy was abolished.

Namiwa therefore wondered why MBS levy has been maintained. He said as if this was not enough, CDEDI shocked that consumers contribute billions of kwachas towards the construction and maintenance of public roads in the country through the roads levy, and yet the country’s roads still remain in very bad state.

“This raises a moral question that is it right to force motorists to dig deeper into their pockets when the roads are not maintained? Given the sorry state of our roads, where do these huge sums of money that are being collected everyday go?” he asked.

Meanwhile, Namiwa has challenged President Chakwera to intervene in the power play game at National Oil Company of Malawi (NOCMA), which imports over 50 percent of the fuel into the country.

He, however, lamented that such calls have allegedly landed on deaf ears, which he said is affecting the negotiating power since the lack of trusted leadership is eroding supply confidence and at the same time affecting the intuition’s risk profile.

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2 years ago

Namiwa was always on MCP’s/Chakwera’s neck when the party was in opposition. One would expect him to do the same to DPP, now in opposition. Briefly, I have never read anything positive about Chakwera from this man, confirming he is a DPP cadet.

2 years ago

If the Fuel Stability Fund was used and exhausted is no more then consumers benifited by lower fuel prices. It is good that the new Board is doing what is expected to maintain a Fuel Stability Fund and a World Price of Fuel in the Country. Fuel should not be a subsidized commodity in Malawi.

2 years ago

Fuel is a fully imported item. Do like they do in South Africa – it is a purely mechanical calculation that takes into account daily movements in exchange rates and costs. In fact, newspapers and the AA post the expected price for the next month almost every day. The Stabilisation Fund should be for shocks, not to ‘subsidise’ when an organization thinks that it should be done. Most of them were set up as a result of the doubling (in one month) as a result of the oil crisis in the 1980’s. Go to cefgroup [dot] Agree that the… Read more »

2 years ago

ku south africa nakoso akweza mafuta, kumenekoso vuto ndi chakwera etttiii? cadet sunathe, umaka mpaka ukwecheee

2 years ago

Some points are true while others can wait.

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