Malawi fuel increase could be illegal

Waiting for fuel

Malawi on Tuesday increased fuel prices by an average 27 percent but legal experts said the move, which will likely stoke inflation in the southern African nation, may be illegal.

The Malawi Energy Regulatory Authority (Mera) said the pump price of petrol had increased by 31 percent, diesel by 38 percent and paraffin by 10 percent to reflect higher world commodity prices since its last revision in January.

“This fuel hike is illegal because under section 9(C) of the Energy Regulations Act, only the Board of the Malawi Energy Regulatory Authority has the powers to approve prices of energy sales and there is no board at Mera at present,” Wapona Kita, one of the country’s leading lawyers said in a posting on Facebook.

President Mutharika dissolved the Mera board in December last year and he is yet to appoint another one.

Those increases have been exacerbated by a 10 percent devaluation of the kwacha introduced in August to counter a chronic lack of dollars in the domestic economy.

Fuel shortages and the soaring cost of imported goods caused unprecedented demonstrations in July against President Bingu wa Mutharika, whose security forces killed 20 people in an ensuing crackdown.

Following the adjustments, petrol will now sell at $2.3 per litre, up from $1.8, and diesel at $2.1, up from $1.6 per litre.

Year-on-year inflation stood at 7.7 percent in September, up from 7.6 percent in August. The Economists Association of Malawi (Ecama) welcommed the increase hoping that this may help ease the fuel shortages that have hit the country and paralyzed production in most industry.

Ecama president Naomi Ngwira  cited the increase in the cost of borrowing for purchasing fuel by government as one other likely factor that might have pushed the increase in fuel prices.

Said Ngwira: “There is justification because petrol price could have even gone higher [than the new price of K380].”

She expressed hope that the increase in the prices of fuel will lead to the stable availability of fuel particularly diesel.