Malawi’s prolonged policy of keeping fuel prices far below regional levels has saddled the country with fuel-related debts of about K1.22 trillion, prompting the government to raise pump prices to prevent further losses, Finance Minister Joseph Mwanamveka has said.
According to Mwanamveka, the artificially low prices benefited neighbouring countries at Malawi’s expense, as foreign transporters routinely crossed the border to buy cheaper fuel.
While petrol and diesel previously sold locally at around K3,500 per litre, prices in Mozambique and Zambia were above K5,000, triggering a surge in demand within Malawi.
Following the government’s recent price adjustment, petrol (gasoline) now sells at approximately K4,965 per litre, up from about K3,499 per litre, a 41.9 % increase.
Diesel is now around K4,945 per litre, up from roughly K3,500 per litre, representing a 41.3 % increase.
The cross-border fuel buying significantly inflated imports. Total fuel imports rose 38% between 2019 and 2025, from about 504 million litres to more than 743 million litres.
Imports by the National Oil Company of Malawi (NOCMA) more than doubled over the same period, increasing 139%, largely due to purchases by foreign motorists.
The minister noted that the sharp rise in imports meant Malawi, a smaller economy compared with its neighbours, was effectively subsidising fuel consumption outside its borders, a situation described as economically unsustainable.
The pricing policy also left fuel importers and marketers selling at a loss.
Government data shows unpaid debts linked to fuel pricing have reached nearly K1.22 trillion, with NOCMA accounting for K967 billion and the remainder owed to private fuel companies.
This debt burden crippled the Malawi Energy Regulatory Authority (MERA)’s ability to remit statutory levies to public institutions.
Funds intended for road construction, rural electrification, fuel reserves, standards enforcement, and other development programmes were withheld, creating a funding gap of more than K593 billion and stalling key projects nationwide.
With fuel prices now increased, the government says MERA will resume collecting levies and settling debts owed to fuel companies.
Authorities also plan to rebuild the depleted Price Stabilisation Fund, designed to cushion consumers from international fuel price volatility.
Mwanamveka added that the price adjustment would reduce fuel imports, ease pressure on foreign exchange reserves, and help stabilise the economy.
The government is also tightening controls to ensure export earnings return to the country and curb distortions in the foreign exchange market, which have contributed to high prices across the economy.
