REVIEW OF THE RETAIL PRICE OF LIQUEFIED PETROLEUM GAS (LPG) IN THE MONTH OF JULY 2019

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.

LPG PRICES ON THE INTERNATIONAL MARKET

The average FOB price for LPG increased in the month of June 2019 when compared to the price noted in the month of April 2019 used in determining the ruling retail price. The FOB price has increased by 28.65% from R8.90/kg as noted in the month of March 2019 to R11.45/kg in the month of June 2019.

 

EXCHANGE RATE MOVEMENT

Since the last price revision in April 2019 the Malawi Kwacha has depreciated against the South African Rand by 7.89% from K52.24/ZAR to K56.36/ZAR.

 

RESULTANT RETAIL PRICE

MERA reviewed the combined effect of the movement of the LPG FOB prices and exchange rate of the Malawi Kwacha to the South African Rand and noted that the landed cost of LPG increased by 28.73%. Under the Automatic Pricing Mechanism (APM), LPG qualified for a price adjustment since the change in landed cost is beyond the ±5% band.

In line with the Automatic Pricing Mechanism, the MERA Board resolved to revise upwards the retail price of LPG as the PSF balance of LPG is not enough to cushion the impact of the landed cost increase. Therefore, the retail price of LPG has been revised upwards as presented below: -     

Current Maximum LPG Retail Price (MWK/Kg)

Recommended Maximum LPG Retail Price (MWK/Kg)

% Change

            2,044.22

               2,291.82

 12.11

     

 

All operators are required to sell LPG at a price not exceeding this maximum retail price.

 

SIGNED

 

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

BOARD CHAIRPERSON                            CHIEF EXECUTIVE OFFICER

5th JULY, 2019                                         5th JULY, 2019