Mera hikes fuel, electricity tariffs


The Malawi Energy Regulatory Authority (Mera) has announced the increase in fuel and electricity prices with effect from today.

A statement released by Mera stated that petrol is now at K606.30 per litre up from K539 per litre while diesel will now be sold at K597.40 from K521.90 and paraffin is at K509.90 per litre from K434.30 for industrial use and for domestic use it remains at K171.

“Since the 11 May 2012, LPG [Liquefied Petroleum Gas] price adjustment, the Malawi Kwacha has continued to depreciate against South African rand and the FOB [Freight on Board] price for LPG has increased by 22 percent over the same period,” reads the statement.

According to the statement, Mera considered the recent trends in the World Petroleum product’s prices and changes in other macroeconomics fundamentals in the local market and their impact on energy prices.

It further indicates that since the last pump price revisions on 7 September 2012, FOB prices for petrol and diesel declined while paraffin FOB prices increased on the international market following global economic concerns that have effected demand.

“However, during the same period the Malawi Kwacha depreciated against the Us dollar from K288. 99 ruling in September to K323.90 as noted on the 5th November 2012. This represented a 12.08 percent loss in value of the local currency,” it says.

In further states, “A combined effect of the FOB prices and the exchange rate of Malawi Kwacha to the US dollar has resulted in increased landed cost for petrol, diesel and paraffin by 9.2 percent, 13.54 percent and 16.03 percent respectively.”

On electricity, the authority indicated that since the May 2012 adjustments of electricity tarrifs by 63.52 percent based on the Automatic Tariff Adjustments of Electricity Tariffs (Ataf), both inflation and exchange rate have continued to deteriorate.

The trend which they said continued to negatively impact Escom’s financial position.

“The exchange rate has moved from 255/US$1 as was recorded in May 2012 to K309.75901 as registered in October 2012. Inflation has more than doubled from 11.46 to 25.5 percent over the same period.

“The combined effect of the movement of the exchange rate and inflation has negatively impacted on Escom’s financial position. Escom has to raise more money in local currency to meet existing foreign currency obligations for its suppliers and lenders,” the statement signed by Mera Chairperson Lyton Zinyemba says.

It therefore indicated that the electricity average price has been adjusted upwards from an average of K16.05 per kilowatt hour to K22.78 per kilowatt hour as the maximum.

On October 4, the authority reversed a price hike following a review meeting citing “technical hitches”.

According to that statement, diesel had risen by 6.3 percent to K554 per litre, petrol by 5.7 percent to K570 per litre and industrial paraffin by 8 percent to K469 per litre.

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