Malawi electricity tariffs hiked: Fuel prices cut

Malawians are expected to dig deeper into their pockets following the hiking up of electricity tariffs by Malawi Energy Regulatory Authority (MERA) but have a relief with the reduction of fuel prices.

The energy regulation body in its statement released to newsrooms that it has increased the electricity price from an average of K22.78 per kilowatt hour to K29.55 per kilowatt hour as the maximum.

Mera says since the November, 2012 adjustment of electricity tariffs by 49.91 percent based on the Automatic Tariff Adjustment Formula (ATAF), both inflation and exchange rate continued to deteriorate.

“Although the kwacha stabilized and gained value over the past few weeks, the gains from the appreciation of the kwacha have been wiped out by the backlog on outstanding projects loans and bills to supplies designated in dollars leaving a net excha

Chiwaya: Its Mera which announce prices not a Minister
Chiwaya: Its Mera which announce prices not a Minister

nge loss which is not covered.

“Electricity Supply Corporation of Malawi (Escom) therefore has to raise more money in local currency to meet existing foreign currency obligations for its suppliers and lenders,” said  Mera.

Fuel price cut

Meanwhile, the statement which was signed by Lyton Zinyemba, Chairperson of Mera, formally announced the reduction of fuel prices.

But Mera chief executive officer Alexious Chiwaya said there was no decision by the board when Minister of Energy Ibrahim Matola announced the price reduction.

It said since the last pump price revision of 12th March 2013, FOB prices for petrol, diesel and paraffin decreased on the international market following global economic concerns that have affected demand.

However, during the same period, the Malawi kwacha has appreciated against the US Dollar from K414.38 to K390.00 as noted on 30th April 2013. This represented gain in value.

Mera also revised industry, for example; the wholesale margins for oil Marketing Companies, Retail Margins for Service station operators, Distribution Margins and Road Freight Rates for fuel tanker operators to enable them cover their operational costs.

A combined effect of the movement in FOB prices and the exchange rate of Malawi Kwacha to the US Dollar have resulted in a decrease in the landing costs for petrol, diesel and paraffin by -13.22 percent, -10.14 percent and -9.54 percent respectively.

“Petrol which was on K714.90 is now at K694.30 per litre giving -2.88 percent, Diesel is now at K677.20 per litre from K693.80 giving -2.40 percent, Paraffin used in industries which was on K613.90 is now at K595.00 giving -3.08 percent and domestic paraffin remains at K171.00 per litre,” indicated the release.

According to Mera, the new prices have started working from 6:00 pm on May 9th 2013 and all operators are required to sell energy products at prices not more than the set prices.

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