Kapito against Escom privatisation: Hits at IMF and World Bank

The consumer and human rights activist, John Kapito has warned Millennium Challenge Corporation (MCC) not to use its technical and financial support on the restructuring of Electricity Supply Corporation of Malawi (Escom) as passport to influence and dictate the country’s policies.

Kapito has also taken a swipe on the donor community especially the International Monetary Fund (IMF) and the World Bank for dictating the privatization of the country’s public institutions, and blamed the country’s leadership of lacking a clue on grants and loans donors provide to this country.

The consumer advocate made the omments at the time when government is planning to restructure the power market by unbundling Escom, with support from MCC, into two companies amid reports that the same government was considering privatizing strategic stake and management rights of the company.

The Ministry of Natural Resources, Energy and Mining with technical and financial support from Millennium Challenge Account Malawi, said was considering to unbundle ESCOM into two companies- one responsible for generation and the other for transmission and distribution of electricity.

“The fact that they have provided us with a grant or loan must not be a passport for MCC to use as a tool to influence and dictate our policies they can’t give us aid and write our laws but they must encourage us through partnerships to see how best we can navigate to have good energy reforms and policies they can’t use their aid to but our energy policy development programmes,” Kapito told Nyasa Times in an exclusive interview.

Kapito said it was unfortunate that donors have been pushing for the country to privatize its public institutions despite the fact that such initiative has not benefitted Malawians although many of government-owned institutions have been privatized over the years.

“Unfortunately today conditions to privatize or sell public institutions are dictated by those we borrow money from, IMF and World Bank, who do not really care at the future of any developing country until today they can’t answer whether we benefited from the privatisation of our key public industries,” said Kapito.

“Unfortunately our leaders seem clueless and they have no idea of what will be the negative effects of these grants and loans where the people that lend us money become the real armchair leaders”.

He then backed the idea of restructuring the power market by allowing new players to compete with Escom but warned government and the donor community from privatizing the utility company, arguing Malawi was not ready to privatise or sell some stakes in Escom but instead the company should undergo major reform and restructuring.

“We are not ready as country now to let Escom to be in private hands but as Malawians we are ready to restructure Escom so that it is independent from Government interference at the same time making sure that it continues to carry out its social corporate responsibilities to ensure that at least Malawi has attained 70 percent of electricity coverage to its people,’’ explained Kapito.

Kapito believes that Escom can be restructured without selling or privatizing any stakes, saying Malawi can still manage and control its full shares only if the company’s management and corporate structure is independent from Government control.

“If indeed Government needs to load off some of the functions it’s important to do a lot of studies where this has worked; unfortunately any of this has not been successful in any developing economies. The key answer is reform and restructures Escom for the good of Malawians and let us as Malawians own the process’’.

Ministry of Natural Resources, Energy and Mining in collaboration with Malawi Energy Regulatory Authority (Mera), Escom and MCCA-M, is expected to complete the restructuring of Escom is expected to be completed by 30th June 2016. The process will also bring in Independent Power Producers who will be given licenses to produce their own power and sell to the nation.

“It’s early too soon to let Escom to be left in private hands and it will be the worst disaster for Malawians and success for our partners that are pushing for the sale mark my words’’.

About 9 percent of Malawians have access to electricity.