REVIEW OF JET A-1 PRICES IN THE MONTH OF MAY 2019

BACKGROUND

Malawi Energy Regulatory Authority (MERA) considered recent trends of oil prices on the international market and changes in other macroeconomic fundamentals in the local market and their impact on Jet A-1 airfield prices.

 

JET A-1 PRICES ON THE INTERNATIONAL MARKET

The average Free On Board (FOB) price for Jet A-1 increased in April, 2019 when compared to the average FOB price obtained in the Month of December, 2018 on which the ruling airfield prices are based. The Jet A-1 average FOB price increased by 18.75% from USD539.65 USD/MT to USD640.83 USD/MT.

 

EXCHANGE RATE MOVEMENT

 When compared to the exchange rate noted during the last price review, the Malawi Kwacha has slightly depreciated by 0.93% to K746.79/USD from K739.89/USD.

 

JET A-1 PRICES

The MERA Board considered the combined effect of the movement of the Jet A-1 FOB prices and exchange rate of the Malawi Kwacha to the US Dollar as well as changes in local factors that determine the Jet A-1 prices. The Board noted that the Jet A-1 landed cost increased by 11.85% and 12.11% at Kamuzu and Chileka International Airports, respectively. Under the Automatic Pricing Mechanism, Jet A-1 qualifies for a price adjustment since the In Bond Landed Cost (IBLC) changes are beyond the ±5% band at both airports.

 

However, the MERA Board resolved to cushion the impact of the increased landed cost of Jet A-1 through use of the Price Stabilization Fund and therefore resolved to maintain Jet A-1 airfield prices at a level implemented in February 2019 as follows:

 

 

Airport

Current Maximum Airfield Price(Kwacha per Litre)

Recommended Maximum Airfield Price(Kwacha per Litre)

% Change

KIA

705.24

705.24

    0

CHILEKA

655.61

655.61

    0

 

All operators are required to sell Jet A-1 at airfield prices not exceeding the maximum recommended Jet A-1 prices.

 

 

SIGNED

 

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

BOARD CHAIRPERSON                      CHIEF EXECUTIVE OFFICER

9th May, 2019                                    9th May, 2019