25 April 2018

Malawi: Low Tariffs Scare Away Private Sector in Malawi Electricity Business

State electricity companies Egenco and Escom say the private sector is refusing to venture into the power business unless the government increases the tariffs from the current K73 per kilowatt per hour to K250 per kilowatt per hour.

Some of the private sector officials interested in the generation of power, including Press Corporation, have said selling the electricity at the current rate would be a loss.

"Egenco and Escom can sell the electricity at a loss because they are government entities, when they make losses, the government comes in to bail them out, this cannot be the same with us," said one of the private sector investors who was allowed to generate electricity but opted not to be named.

The issue also came up at a high-level energy meeting called for by the civil society organisations who wanted to find out why there are still rampant power black outs when the government had hired gen sets.

Robert Mkwezalamba from the Human Rights Consultative Committee (HRCC) said the government should take a loan from donors to deal with the electricity problems once and for all.

"As a government, they can take a loan from our developing partners to revamp the whole power system," said Mkwezalamba.

US ambassador to Malawi Virginia Palmer said Malawi needs heavy investment in the energy sector to address the problem of power problems that have virtually crippled the economy.

She said the US$350 million five year Millenium Challenge Compact funded by her government, was designed to improve power distribution but urged the government to raise power tariffs.

"Right now, all the electricity that is being produced is being sold for less than it costs to make it and Escom is losing money," she said.

She said private investors would not come and build power plants to sell power to Escom, saying therefore there was need for cost-reflective tariff.

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