FUEL PRICE ADJUSTMENT: A NECESSARY EVIL
Based on the formal notification regarding the removal of the MERA Board of Directors dated 8th October 2025, fuel price adjustments are justified by the need to correct “gross mismanagement” and restore the financial viability of Malawi’s energy sector.
The document outlines several critical reasons why fuel prices must be adjusted:
- Attaining Cost-Reflective Pricing
The previous board failed to implement non-cost-reflective tariffs and prices, which made the energy sector “financially nonviable”.
Current fuel prices did not reflect high landed costs, meaning the “unrealistic” prices at the pump were significantly lower than the actual cost of importing the fuel.
- Restoring the Price Stabilization Fund (PSF)
The failure to adjust prices led to the total depletion of the Price Stabilization Fund (PSF).
Historical Context: In June 2020, the PSF had a positive balance of MK10.9 billion.
Current Crisis: By October 2025, the fund moved into a debt of MK1.1 trillion due to unpaid “under-recoveries” to Oil Marketing Companies (OMCs).
- Funding Essential Infrastructure (Levy Remissions)
Because fuel prices were kept artificially low, the Authority failed to collect and remit necessary levies to vital beneficiaries. Adjusting prices is necessary to resume funding for:
MAREP Fund: For rural electrification projects.
Roads Fund Administration (RFA): To repair damaged roads that have been neglected due to a lack of funds.
- Ending Chronic Fuel Scarcity
The document explicitly links the lack of price adjustments to the “prolonged fuel supply challenges” and “long fuel queues” observed leading up to and on the voting day of 16 September 2025.
Adjusting prices would:
Allow the National Oil Company of Malawi (NOCMA) to invest in and stock Strategic Fuel Reserves, which have remained empty for an entire year.
Provide a “buffer to cushion” logistical and supply challenges that currently trigger immediate crises.
- Implementing Scientific Pricing Tools
The removal notice criticizes the board for failing to use the Automatic Pricing Mechanism (APM). This tool is designed to determine fuel prices in a “fair and scientific manner” to avoid the “arbitrariness” that has recently destabilized the sector.
If this administration is serious about stabilising the economy, they need to take very difficult decisions which will in the short and medium term be painful but “sweet” in the long term.