Malawi: Energy Minister Justifies Fuel Price Hike

Malawi’s Minister for Energy and Mining, Dr. Jean Mathanga, has justified the government’s decision to hike petrol and diesel prices by more than 40 percent.

This comes amid public anger over the government’s sharp increase in fuel prices.

Addressing a press conference last Wednesday, Dr. Mathanga explained that Malawi’s fuel prices had remained lower than those of neighbouring countries because the Automatic Pricing Mechanism (APM) had been abandoned over the past three years, a move that negatively affected the collection of road levies.

She noted that during the previous administration, fuel became scarce, forcing motorists to spend long hours queuing for the commodity. According to her, the recent upward adjustment in fuel prices is expected to eliminate such challenges, as the current government has reinstated the APM to ensure a consistent fuel supply.

The minister further observed that the fixed fuel prices used by the previous administration encouraged fuel smuggling, as price differentials with neighbouring countries made the practice rampant. She added that adopting realistic fuel pricing would help curb smuggling.

Petrol prices were increased from MKW 3,499 to MKW 4,965 per litre, while diesel prices rose from MKW 3,500 to MKW 4,945 per litre—representing increments of MKW 1,466 and MKW 1,445 respectively.

In a statement issued by the Malawi Energy Regulatory Authority (MERA) and signed by its Board Chairperson, Lucas Kondowe, the regulator explained that the price hikes were intended to sustain the importation of petroleum products.

The Board noted that historically, MERA had adopted an Automatic Pricing Mechanism under which movements in pricing model parameters of more than five percent trigger automatic price adjustments. However, the mechanism was abandoned over the past three years in favour of a fixed pricing regime, which proved to be commercially unsustainable.

“This led to significant trading losses, resulting in the inability to import adequate petroleum products and to remit economically important levies such as the Road Levy to the Road Fund Administration (RFA) and the Rural Electrification Levy to the Malawi Rural Electrification Programme (MAREP) Fund,” the statement said.

MERA added that the situation contributed to the deterioration of roads nationwide and delayed the implementation of key MAREP projects across the country.