REVIEW OF THE RETAIL PRICE OF LIQUEFIED PETROLEUM GAS (LPG) IN THE MONTH OF OCTOBER 2019.

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 FOB price for LPG increased in the month of October 2019 when compared to the price noted in the month of September 2019 used in determining the ruling retail price. The FOB price increased by 1.99% from R8.86/kg as noted in the month of September 2019 to R9.04/kg in the month of October 2019.

EXCHANGE RATE MOVEMENT

Since the last price revision in September 2019, the Malawi Kwacha has remained stable against the South African Rand trading at K48.94/ZAR. The price recommendation of LPG for the month of October 2019 has considered this exchange rate movement.

 

NEW TAX MEASURES

During His budget Statement on 9th September 2019, the Minister of Finance, Economic Planning and Development announced new tax measures that became effective midnight of 9th September. Among the measures was introduction of a zero rate VAT on LPG and gas cylinders. Introduction of the zero rate VAT on LPG reduced the retail prices by 17.41% from K2048.56 to K1744.75 per kilogram.

 

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 dropped by 2.32%. Under the Automatic Pricing Mechanism (APM), LPG does not qualify for a price adjustment since the change in landed cost is within the ±5% band.

In line with the Automatic Pricing Mechanism, the MERA Board resolved to maintain the retail price of LPG as follows:     

Current Maximum LPG Retail Price (MWK/Kg)

Recommended Maximum LPG Retail Price (MWK/Kg)

% Change

1,744.75

1,744.75

    -

     

 

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

 

SIGNED

 

Rt. Rev. Dr. Joseph P. Bvumbwe                  Dr. Collins Magalasi

BOARD CHAIRPERSON                                  CHIEF EXECUTIVE OFFICER

8th October, 2019                                           8th October, 2019