REVIEW OF PRICE OF LIQUEFIED PETROLEUM GAS (LPG) IN THE MONTH OF OCTOBER, 2018

BACKGROUND

Malawi Energy Regulatory Authority (MERA) considered recent trends in the world petroleum products’ prices and changes in other macroeconomic fundamentals in the local market and their impact on energy prices.

 

LPG PRICES ON THE INTERNATIONAL MARKET

The average Free On Board (FOB) prices for Liquefied Petroleum Gas (LPG) increased in the month of October 2018 when compared to the price observed in the month of September 2018 which formed the basis of the current retail price of LPG. The average FOB price has increased by 3.24% from R10.49/kg to R10.83/kg.

 

EXCHANGE RATE MOVEMENT

Since the last price revision in September 2018, the Malawi kwacha has depreciated against the South African Rand from K50.22/ZAR to K52.60/ZAR thus representing a loss in value by 4.74%.

 

RESULTANT RETAIL PRICE

MERA reviewed the combined effect of the movement of the LPG FOB prices and exchange rate of the Malawi Kwacha to the South African Rand and noted that the landed cost of LPG increased by 6.47%. Under the Automatic Pricing Mechanism (APM), LPG qualified for a price adjustment since the change in landed cost was beyond the ±5% band.

Considering the magnitude of the change of the landed cost, the MERA Board resolved to maintain the retail price of LPG as implemented on 12th September 2018 through use of the Price Stabilization Fund. The maintained maximum recommended retail price of LPG is summarized below: -     

              

Current Maximum LPG Retail Price (MWK/Kg)

Recommended Maximum LPG Retail Price (MWK/Kg)

% Change

2,119.87

2,119.87

 -

     

 

All operators are required to sell LPG at a price not exceeding this maximum retail price.

 

SIGNED

 

Rt.Rev.Dr. J.P. Bvumbwe

BOARD CHAIRPERSON

MALAWI ENERGY REGULATORY AUTHORITY

5th October, 2018