Malawi keeps fuel prices down

The Petroleum Pricing Committee (PPC) made a recommendation to the government to review fuel prices three weeks ago, but so far no feedback has come from the State. Malawian importers face a grim future if prices are not reviewed soon as increases on the international market translate to losses for them. This is the case because, as a non-oil producing country, Malawi has no control over the price of imported oil, which is quoted in US dollars. In addition, the Malawi kwacha has been depreciating against the benchmark US dollar. Three weeks ago, the PPC ‘ a grouping of stakeholders on fuel ‘ met and recommended a hike in pump prices to the government to suit increases on the international market which had exceeded US$65 per barrel. This week international oil hit US$77 per barrel. The current price levels on the international market reflect last August’s peaks when supply disruptions as a result of cyclones Katrina and Rita ‘which hit the US oil refineries on the Gulf of Mexico-triggered worldwide increases. PPC Chairman Chancellor Kaferapanjira confirmed submitting the recommendation to the government three weeks ago, but expressed concern that up to now no decision had been made. He said if approved, the recommendation would likely see the price of petrol and diesel ‘ the major petroleum products used in Malawi ‘ increasing to about K150 per litre. Currently, petrol is selling at K134, 80 per litre and diesel K132,70 per litre. “We understand the government has a number of reasons for not wanting a fuel price hike and inflation is one of them. But the problem is that delaying the increase will hurt importers, who will incur losses,” Kaferapanjira told journalists. He said fuel importers last year incurred a loss of about K600 million as a result of a similar delay to effect pump price increases. Mines, Natural Resources and Environmental Affairs Minister Henry Chimunthu Banda told the Nation Online that he was not aware of the recommendations as he was not in the office when it was submitted. He said, however, that when the government receives such proposals, it does not rush into rubber-stamping an increase without consulting key decision makers such as the ministry of Finance. "There are some procedures we require to follow. We’ve to sit down and analyse all the variables ‘ it’s not always that the government just rubber-stamps such recommendations,” he said. With inflation expected to increase from 17,1 percent, an increase in pump prices of fuel is feared to worsen the inflation out-turn as transport and other operational costs for industry are expected to increase. Current increases in oil price on the international market should also put pressure on the country’s foreign currency reserves, which are currently at their lowest. Meanwhile, a humanitarian visit to Malawi last year by Jack McConnell, a Member of the Scottish Parliament for Motherwell and Wishaw and Scotland’s First Minister, has caused a stir in his country after revelations of shocking expenditure. It has been revealed that the trip cost nearly ’34 500 ‘ almost as much as his appeal fund for the country raised in its first eight months. Former Scottish Tory leader David McLetchie said it might have been better to forego the trip and donate the money to the appeal. The details of the costs were revealed by the Scottish Executive under freedom of information legislation. They show a preparatory one-week visit by two executive officials in April last year cost ‘8 258, including ‘6 507 on flights, ‘606 on immunisations and ‘590 on accommodation. And the visit itself, involving the First Minister and six officials, produced a total bill of ’26 223, including ’20 131 on flights, ‘816 on immunisation and ‘2 744 on accommodation. McConnell launched the Scotland-Malawi Appeal soon after returning from the visit last May, arguing Scots had a moral duty to help end poverty in the Third World. But it got off to a slow start, raising just ’35 000 in its first eight months. The fund has now reached ’60 000 and is expected to get a dramatic ‘240 000 boost over the next few months. Best-selling author Alexander McCall Smith has pledged the royalties from the sale of his book, The Girl Who Married a Lion, which is expected to add around ’40 000 to the fund, while runners in the Dundee half-marathon will pledge part of their sponsorship money to the appeal, which could raise up to ‘200 000. McLetchie highlighted the comparison between the bill for the First Minister’s visit and the initial poor response to the appeal. He said: “The cost of the trip was almost as much as the appeal raised in its first eight months of its existence. “It might have been better donating some of the cots of the trip to the appeal fund, although it now finally seems to be doing better thanks to Mr McCall Smith and the Dundee runners.” Malawi is one of the 10 poorest countries in the world and has one of the worst HIV/Aids rates with around one million people infected ‘ more than the total number in Europe and North America combined ‘ and around half a million orphans, roughly equal to the population of Edinburgh. Malawi’s government can only afford to spend on average ‘6 per person each year on healthcare.

April 2006
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