Govt admits fuel prices may go back up

Government has admitted that the recent reduction trend in fuel prices may not last forever as market factors such as the exchange rate and international oil prices may force the prices to start increasing again.

Responding to a question on the sustainability of the declining fuel prices, Minister of Energy Ibrahim Matola said yesterday Malawi was currently just enjoying the benefits of the Automatic Price Mechanism.

“The prices of fuel have indeed gone down and that is the good thing about the automatic price mechanism adopted in the economic recovery plan,” he said.

He, however, explained that fuel prices will continue to be dictated by market forces, hence it was not up to the government to say whether the prices will continue to go down or not.

“It all depends on the international market as you know the prices are controlled internationally. Again the strength of the kwacha will also determine the fuel prices. As of now, the kwacha is doing well against the major currencies like the US [United States] dollar, hence the reduction in fuel prices,” said Matola.

He said if the kwacha continues to appreciate, motorists should also expect the prices of fuel to continue falling or at least stabilise at some point. Matola, however, observed that regionally, prices of fuel have gone up recently because some currencies have depreciated.

“Zambia and South Africa, for example, have seen their fuel prices go up because their currencies depreciated against the US dollar,” he said.

He said, however, that the Malawi government is exploring all avenues to make sure that the kwacha stabilises in the long term. The Malawi Energy Regulatory Authority last Thursday announced a reduction in the prices of fuel for the second consecutive time within two months.

The adjustment has seen the price of petrol going down by 1.94 percent to K680.80 from K694.30 per litre while diesel is now selling at K657.40 from K677.20 per litre.