Harsh reality: We suppressed fuel prices for so long
I may not be competent to comment on today’s fuel price increase. But as someone conversant with oil price trends and dynamics, this fuel price hike was inevitable and in fact long overdue.
Let us not put into oblivion that the country last revised fuel price eight months ago and in particular, on 8 March, 2021.
Then, petrol has increased from K834.60 to K899.20 representing 7.74 percent diesel from K826.40 to K898.00 representing 8.66 percent while Paraffin increased from K613.20 to K719.60 representing 17.5 percent. As a motorist, this was a bitter pill to swallow.
However, following today’s pump price review, petrol price has gone up by an average of 28 percent from K899.20 to K1,150; diesel price has shot up from K898 to K1,120, thus representing 25 percent jump while paraffin has seen its price increasing by 15 percent to K833.20 from K719.60.
Covidi-19 has been a better devil, when it comes to fuel prices, and let us all accept this harsh reality.
Oil prices dropped at the start of the Covid-19 pandemic, and in April last year prices fell below zero for the first time in history as lockdown wiped out demand while producers continued to pump crude from their wells.
However, it should be highlighted in recent months, aggregate demand for fuel as economies around the world have started to reopen, pushing world oil prices upwards in the process.
Let us also remind each that pump price adjustments continue to be based on the Automatic Price Mechanism (APM) which was re-adopted in May 2012.
And as we speak, the Malawi Kwacha has depreciated by 4.52 percent from an average exchange rate of K787.85/USD in March 2021 to the current average exchange rate of K823.49/USD. Do not underestimate this magnitude of Kwacha fall. It has serious economic ramifications, not only on fuel pricing.
As such, fuel prices continue to reflect changes in the value of In Bond Landed Cost (IBLC) of petroleum products and movements of the Kwacha against the United States Dollar.
The fuel pricing regime operates within a specified threshold of5 percent. This means that any change in IBLC of more than 5 percent threshold triggers a price adjustment in the local pump price.
And today’s fuel price hike is not in vacuum. The Malawi Energy Regulatory Authority (MERA), a corporate body established under the Energy Regulatory Act No.20 of 2004 to regulate the energy sector in Malawi in a fair, transparent and efficient manner, has critically 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.
This authority has evaluated the combined effect of the movement of the FOB prices, the exchange rate of the Malawi Kwacha against the United States Dollar, and changes in local factors that determine the maximum pump prices on the landed cost of petroleum products.
All these factors have necessitated the increase in fuel price hike. No matter how long it may take but a bubble has to burst. This decision, I have a strong conviction that, is apolitical.
The continued suppression of the fuel prices was a burden on the suppliers as they were buying the commodity at a higher price on the international market.
Fellow Malawians, it is better to have fuel at a little bit higher price than having a situation where the suppliers get disoriented and reduce the quantities. Imagine queues that were seen recently after a day or two of less supply due to truck drivers’ strike.
As a motorist and a law abiding citizen, I welcome this fuel price increase as it is a painful reality and necessary.
Follow and Subscribe Nyasa TV :
Nosense.Automatic fuel pricing doesn’t happen haphardly.Thats where we need people with brains to run this country .Not figure heads.And we need reporters who report on issues they can ably articulate.
Let us not celebrate incompetence! Boma likulephera! Period! Things are falling apart! And my statement is apolitical!
The price of fuel in Malawi is cheaper than UK so stop complaining. Short distance why not walk or use pedal bike. It will be good for your wellbeing
The mess which DPP left. Ghost payrolls etc, always come back to bite. Unfortunately it rests on Tonse government. Economics can not be hidden. You don’t hide science.
The should have also told Malawians that this painful reality of price increase is necessary because the prices of fertilizer which is already at 45,000 could also increase and that Malawians should just accept this. If people follow price increases, in month of September things have been unbearable. Malataprices were rising almost every two days. It’s necessary!!!!
This reminds me of my late mother’s advice. She advised that ‘make as much money as you can, so that you do not ever worry about inflation. That was in 1971.
You are absolutely right on one thing, YOU ARE NOT competent to comment on fuel price increase.
Now that we’ve gotten that out of the way, let me tell you that as a political economist, there is no such thing as apolitical decision. The reason the kwacha is depreciating is because of bad political policies. And the reason they choose 28 percentage hike is also a political policy, by the way 28 percentage hike is very steep and can’t be justified with fuel and currency hikes.
Sikumalawi kokha wakwela fuel..even ku south africa wakwela kwabasi from R16.68 to R18.64
Amutumani kkkkk Mene amasisa mitengo ngati madolo samkaziwa kuti fuel samapangidwa Malawi. Amapangilanji promise kuti apanga cut price like so ? Akuyenera kupitiliza kupanga surpress price becoz they use that gimick on us
Very true, harsh reality
Incompetent to increase fuel prices by 28.8% in one go when the National Fuel Reserves have more than two months cover. Price increase should have been staggered over three months. This is a cash grab when the fuel reserves were purchased at lower costs. This huge increase will drive up inflation, interest rates and the Kwacha will suffer further along with its citizens.
In our country, we also factor in the cost of corruption. And everyone is happy.
Useless economic jargon. The truth is pa ground sipali bho. Tonse government is failing us big time
Another useless piece of english word put together. The author might need to be reminded that what’s happening today is not what we were promised or told prior to the elections.
It’s high time we must take our leaders to task for fooling the citizenry on things that are beyond their control. One overzealous vice president once promised Malawi where prices of goods and services would go down only to experience the worst and opposite to what is on the ground.
We shouldn’t be fooled by people like the author of this useless writing.
Fuc Malawi
However, Saulos Chilima made it public during campaign period with his Tonse friends that fuel price will not be an issue when they come into power. He even said that better put competent people at MERA to manage fuel other than hiking the prices.
Some of us wonder as to how this is happening when Chilima and the Tonse are alive and watching things happening in this manner.
Where is Chilima, Joyce, Manganya, Mtambo, Lazaras, Mkaka, Trapence, and others when this is happening? Are they really here in Malawi?
Lord have Mercy on us – dziko lawola ili
This looks like a political speech too. How can a fuel price hike be a good thing? It is not a good thing. I wish you just reported facts without urging us to take your perspective rather leaving us to put things together and draw conclusions on our own.
Brutal truth, Malawi is being led by incompetent leaders ( dunderheads )
Covid19 has hit the whole world but where there competent leaders things are better
Mr John Magwaya,You being the MCP/UTM sympathiser,I see no logic in what you have written for Malawian.It colud have been better you wrote on thievery done by your MCP/UTM alliance .
Anyway ,thaose are your thoughts Mr Magwaya,you have the right.Bou a sterm warning ,Do not take Malawians for a ride and for granted.This will blast at one point.Malawians have been patient for long.