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President Lazarus McCarthy Chakwera has dissuaded the Malawi Energy Regulatory Authority (MERA) from increasing fuel prices by 30 per cent, this publication has learnt.
There has been a lot of discussion over the past week on how regulators can impose upward adjustments on petroleum products to normalize the logistics of imported goods in the country.
Mera was in huge debt due to artificially low fuel prices, which in turn reduced the working capital of fuel importers, who were left with K785 billion in debt that the regulator had to pay as compensation.
When Malawians learned of the impending price hike, there was an outcry, with people fearing that the decision would lead to an increase in the cost of all goods in the market.
Chakwera received a recommendation from MERA to increase the price of both petrol and diesel by not less than 30 percent to reflect the sharp increase in the cost of fuel in the international market over the past few months, a rise that has caused fuel suppliers in Malawi to sell fuel at a loss and has led the government to incur a huge and unsustainable debt to suppliers.
The president responded to those concerns and argued that a 30 percent fare increase was not a viable solution.
Sources within the President’s office with first-hand knowledge of the matter revealed to this publication that Chakwera later rejected the proposal, arguing that while fuel prices were determined by market forces, it was his government’s responsibility to intervene when necessary in the interest of Malawians’ poor to cushion the blow of rising global fuel prices.
“Yes, the proposal is on his desk but he is at odds with the Mela. He asked them to understand the concerns of the Malawian people so that a decision can be made that is in line with economic realities and also addresses the plight of the citizens,” the source said.
With this executive decision, the President overturned a policy that other stakeholders had already approved.
Parliament and a consumer advocacy think tank have endorsed a 30 percent price hike as the best solution. The Consumers Association of Malawi, which mainly sides with the oppressed, argues that fuel prices in Malawi have been kept at a level for a long time, an economic decision that is counterproductive and could soon explode into a crisis.
President Chakwera’s decision is in line with the philosophy of his Malawi Congress Party, which advocates for a democratic developmental state that enables citizens to prosper through pro-poor economic means.
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