Fuel prices up 7 percent
Malawi Energy Regulatory Authority (Mera) has increased fuel prices by an average 6.76 percent with effect from 6am today, a statement from the body says.
It attributes the hike to the increase of petroleum products on the world market and the further depreciation of the kwacha against the US dollar.
Petrol now sells at K570. 20 per litre up from K539, representing a 5.79 percent rise; diesel at K554.80 a litre up from K521.90, representing a 6.3 percent increase and paraffin for industrial use at K469.90 a litre up from K434.3, representing an 8.2 percent increase, a statement from the organisation says.
However, Mera, which also increased fuel prices last month, has not changed the price of paraffin for domestic use which remains at K171 a litre.
"Since the last pump price revision of September 7, 2012, average FOB (free on board) prices on the international market increased by 1.05 percent and 2.50 percent on diesel and paraffin, respectively. During the same period average FOB prices for petrol slightly declined by 0.56 percent.
"The exchange rate of Malawi kwacha to the US dollar has depreciated by 6.73 percent over the same period of time from K288.99 to the US dollar noted on September 7, 2012 to K308.45 to US$1 on October 2, 2012," reads the statement signed by Mera board chairperson L. Zinyemba.
Mera says a combined effect of the FOB prices and the further depreciation of the kwacha has resulted in increased landed cost for petrol, diesel and paraffin by 5.66 percent, 7 percent, and 8.12 percent, hence the regulator's decision to increase the prices in line with the automatic pricing mechanism (APM).
There has now been a monthly increase of fuel prices since early August when Mera also increased fuel prices for the same reasons of the depreciation of the kwacha against major foreign currencies and increasing fuel prices on the international market.
The APM is a departure from the previous arrangement when there was a fuel stabilisation fund to cushion consumers against price fluctuations.
Although it has come under heavy criticism for subjecting Malawians to international shocks, the government argues the APM facilitates immediate full recovery of the cost of fuel importation by local fuel companies