REVIEW OF PRICES OF PETROL, DIESEL AND PARAFFIN IN THE MONTH OF NOVEMBER 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.

 

PETROLEUM PRODUCTS INTERNATIONAL PRICES

In October 2019, the average FOB prices of Petrol, Diesel and Paraffin increased by 16.12%, 11.55% and 6.05%, respectively, when compared to the averages obtained in the month of December 2018 used in determining the ruling pump prices. On a month to month basis, it was noted that the FOB prices slightly declined in October 2019 when compared to prices obtained in September 2019. The decline was noted at 3.66%, 2.50% and 4.21% for petrol, diesel and paraffin, respectively.

 

EXCHANGE RATE MOVEMENT

Since the last In Bond Landed Cost (IBLC) review in January 2019, when pump prices were last revised, the Malawi Kwacha slightly depreciated by 0.30% to K742.01/USD from K739.78/USD.

 

PUMP PRICES                                                                                                                         

MERA assessed the combined effect of the movement of the FOB prices and exchange rate of the Malawi Kwacha to the United States Dollar as well as changes in local factors that determine the maximum pump prices and noted that the landed costs of Petrol, diesel and paraffin increased by 11.27%, 7.99% and 4.57%, respectively. The changes in the landed costs qualified petrol and diesel only for a price revision since the changes in the landed costs were beyond the ±5% trigger limit. The Board also considered liquidity of Price Stabilisation Fund (PSF). Since the last price revision in January 2019, MERA has been using the PSF to cushion importation losses as FOB prices remained higher than the prices used in December 2018 due to geo-political factors and OPEC member countries decision to reduce production in support of oil prices. The Board has since noted that the liquidity position of the PSF has declined and can no longer contain the importation losses as FOB prices have remained high when compared to the base, December 2018 FOB prices.

MERA Board has therefore, resolved that pump prices for petrol and diesel be adjusted upwards to allow importers recover their importation costs directly as the PSF can no longer contain the difference between Deemed and Actual landed cost of petroleum products.

Petrol and diesel pump prices have therefore been adjusted upwards as presented below effective 9th November 2019;

Product

Ruling Pump Prices in MK per liter

Recommended Pump prices MK/liter

Percentage Change

Petrol

868.00

930.00

7.14

Diesel

874.00

924.00

5.72

Paraffin

710.50

710.50

-

 

 

 

 

 All operators are required to sell petroleum products at prices not exceeding the above maximum pump prices.

 

SIGNED

 

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

BOARD CHAIRPERSON                   CHIEF EXECUTIVE OFFICER

8th November, 2019                                8th November, 2019