PRESS RELEASE

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 PRICES

Since the last pump price revision of 12th March 2013, FOB prices for petrol, diesel and paraffin decreased on the international market following global economic concerns that have affected demand. However, during the same period, the Malawi Kwacha has appreciated against the US Dollar from K414.38 to K390.00 as noted on 30th April 2013. This represented gain in value of 6%.

MERA also revised industry margins, i.e., the Wholesale Margins for Oil Marketing Companies, Retail Margins for Service station operators, Distribution Margins and Road Freight Rates for fuel tanker operators to enable them cover their operational costs.

A combined effect of the movement in FOB prices and the exchange rate of Malawi Kwacha to the US Dollar have resulted in a decrease in the landing costs for petrol, diesel and paraffin by -13.22%, -10.14% and -9.54% respectively.

ELECTRICITY TARIFFS

Since the November, 2012 adjustment of electricity tariffs by 41.91% based on the Automatic Tariff Adjustment Formula (ATAF), both inflation and exchange rate continued to deteriorate. Although the Kwacha stabilized and gained value over the past few weeks, the gains from the appreciation of the Kwacha have been wiped out by the backlog on outstanding projects loans and bills to supplies designated in dollars leaving a net exchange loss which is not covered. ESCOM therefore has to raise more money in local currency to meet existing foreign currency obligations for its suppliers and lenders.

THE NEW PRICES

MERA has therefore revised the prices of petroleum products and electricity prices effective 6:00pm on 9th May, 2013 as follows:

i) Fuel Prices
The following shall be the maximum pump prices for fuel in Malawi effective 6:00pm on 9th May, 2012:-

Product	Old Pump Price Kwacha per Litre	New Pump Prices Kwacha per Litre	Percentage Change
Petrol	714.90	694.30	-2.88
Diesel	693.80	677.20	-2.40
Paraffin-Industry	613.90	595.00	-3.08
Paraffin-Domestic	171.00	171.00

ii) Electricity Price
The electricity average price has been adjusted upwards from an average of K22.78 per Kilowatt hour to K29.55 per kilowatt hour as the maximum.

All operators are required to sell energy products at prices not more than the set prices.

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LYTON Y. ZINYEMBA
CHAIRPERSON
MALAWI ENERGY REGULATORY AUTHORITY
9TH MAY, 2013.

Source: http://www.meramalawi.mw/?q=content%2Fpress-releasefuel-price-adjustment-2