News that Malawi has yet again hiked up fuel prices is not good for the country.

Fuel prices have been hiked by 40%, the second time in 4 months. Malawi Energy Regulatory Authority (MERA), the country’s energy regulator said that the increases were long overdue and should have been adjusted upwards by the previous government of Lazarus Chakwera. They said this meant that insufficient fuel was imported, and there was a failure to remit economically important levies like the Road Levy to the Road Fund Administration (RFA) and Rural Electrification Levy to Malawi Rural Electrification Programme (MAREP) Fund. The full press release statement has been republished below:

The Malawi Energy Regulatory Authority (MERA) has historically adopted Automatic Pricing Mechanism (APM) under which a movement in model parameters increase/decrease of more than 5% triggers an automatic price adjustment. However, in the last three years, this mechanism was abandoned in favour of a fixed pricing regime that proved to be commercially unsustainable.

This led to significant trading losses, resulting in inability to import adequate petroleum products and inability to remit economically important levies like the Road Levy to the Road Fund Administration (RFA) and Rural Electrification Levy to Malawi Rural Electrification Programme (MAREP) Fund. This resulted in the deterioration of roads countrywide, and delayed implementation of important MAREP projects nationally.

Furthermore, the artificial pricing of petroleum products created arbitrage opportunities for smugglers, resulting in the country losing its scarce foreign exchange resources by subsidising foreign product demands, and depletion of important national Strategic Fuel Reserves (SFRs).
Under the APM, petrol and diesel qualify for price revision for the month of January 2026, since the landed cost of both products is beyond the ±5% trigger band. Therefore, to sustain importation of petrol and diesel, pump prices of these petroleum products have been adjusted upwards effective 20th January 2026 as follows:

The current product ruling pump prices are MWK 3,499 for Petrol and MWK 3,500 for Diesel, and the approved prices are MWK 4,965 for Petrol and MWK 4,945 for Diesel, translating into a 41.90% and 41.29% change respectively.

By law, all operators are required to sell petroleum products at prices not exceeding the above approved regulated maximum pump prices.

Lucas Kondowe
BOARD CHAIRPERSON
19th January 2026

Comment

While there is some truth in the claim that the artificially subsidized fuel prices creates an incentive for fuel smugglers, who buy fuel cheaply in Malawi, and smuggle it outside to sell at a profit, this is not the only reason why Malawi is suffering from a depletion in the country’s foreign exchange reserves.

Last Tuesday, a report from the Platform for Investigative Journalism reported that a criminal syndicate is operating in Malawi that has been using a sophisticated scheme of diverting incoming forex, as well as micro-payments on crypto platforms, with the result that foreign exchange is being siphoned out of the country.

Last week too, an acquaintance asked me whether I would help them pay a transaction for US$7,000, and they would remit the equivalent to an account I told them in Malawi Kwacha. I wonder how many other such transactions are happening with Malawians abroad.

So what MERA is saying is only a small part of the picture. A lot more is going on.

My view remains that Malawi doesn’t have enough industry. We don’t produce enough of anything of value that we can export abroad. The Government of Malawi too doesn’t own any valuable industry abroad that can earn it large sums of foreign exchange. And we import too many things into Malawi from abroad which we can in fact manufacturer within Malawi.

Don’t get me started on cooking oil, sugar syrup, confectionery, tomato sauce, fruit juices, leather goods, and … fertilizer.

That is the main problem of our foreign exchange shortage. And there has never been any urgency by any government to change that sorry state of affairs. And to take serious and decisive measures that curb the situation.

Further, we are continuing to let foreign companies make huge profits over our extractive industries. This remains an anomaly, because what we should be doing is stopping all exports of unrefined minerals, and adding value within the country, so that what is exported is a lot more valuable than the raw ores.