Chikadya resigns as MERA chairperson after his Board was accused of incompetence over CEO Henry Kachaje recruitment
Following Government’s decision to fire the whole of Malawi Energy Regulatory Authority (MERA) Board of Directors in relation to the “poor handling of recruitment” of chief executive officer, Henry Kachaje, Times Group Managing Director, Leonnard Chikadya has tendered his resignation as the Board’s chairperson.
A letter from Secretary to the President and Cabinet, Zanga-Zanga Chikhosi — dated February 18, 2022 — said the firing of the Board was based on an inquiry made by Parliamentary Public Appointments.
Chikhosi indicated that the Public Appointments Committee had been asked to approve the removal from office “on the grounds of incompetence” in Pursuant to Section 8 of the Energy Regulation Act.
The MERA Board was appointed in September 2020 by President Lazarus Chakwera that had Chikadya as its chairperson followed by Thokozani Chimkono, Pemphero Likongwe, Lameck Ntchembe and Alexandr Kalanda.
The ex-officios were Secretary for Energy, Director of Energy Affairs, Comptroller of Statutory Corporations, Secretary to the Treasury and MERA’s CEO.
In his resignation letter date February 26 to the Comptroller of Statutory Corporations Chikadya said he was most grateful to Chakwera for trusting in him to lead the MERA Board and that it was also a privilege to be appointed to that role.
He indicated that chairperson of the Public Appointments Committee sent him Summons to Witness on Monday February 21, 2022 under Section 60(3) of the Constitution and Section 9 of the National Assembly (Powers and Privileges) Act.
“The Summons indicated that the Office of the President and Cabinet (OPC) through the Secretary to President and Cabinet (SPC) had requested the Public Appointments Committee to confirm my removal as Board Member of MERA on grounds of incompetence.
“The SPC had informed the Committee that the decision to remove me from office followed my poor handling of the recruitment of the Chief Executive Officer (CEO) for MERA.
“Following this communication from the Public Appointments Committee (PAC), I saw a leaked letter on social media from the SPC addressed to the Chairperson of PAC that confirmed PAC’s Summons to me.
“I find it troubling that PAC was inviting me to attend to a second Enquiry on a matter that PAC held a similar Enquiry on in October 2021 and made a determination which was duly communicated to the MERA Board on 17th November 2021.
“The Enquiry of PAC was very comprehensive and involved all stakeholders that were involved in the recruitment process including the Office of the President and Cabinet itself through the Comptroller of Statutory Corporations that provided secretarial services during the recruitment process.
“PAC advised the MERA Board that they did not find any reasons to remove MERA Board, and critically, PAC determined that the MERA Board was not incompetent in the recruitment of the MERA CEO.
“It is therefore inconceivable that I would be invited to attend a second Enquiry on the same matter. I am aware that the OPC has been searching for good reasons to remove the MERA Board because of the professional manner in which the MERA Board has handled various strategic matters in the interests of protecting the economic and social welfare of Malawians, as provided for in MERA’s mandate as a Regulator of Energy services in Malawi.”
Chikadya cites two examples that have caused strain in the relationship between the MERA Board and SPC, that include:
1. There are NOCMA premiums fuel contracts that have not been approved by the MERA Board to date, and yet NOCMA is receiving fuel supplies with premiums that remain unapproved. The MERA Board refused to grant such approval on account of the uncompetitive premiums, which would unduly burden Malawians with frequent fuel pump price rises; and
2. During the MERA Board enquiry, PAC was able to establish that having the SPC as Chairperson of various Boards of Public Enterprises including NOCMA, EGENCO, and Power Marketing Limited is a serious governance anomaly. It would be extremely difficult for the MERA Board to provide oversight of regulation on any institution where the Chairperson is the SPC, who also heads Civil Service. The recent PAC report to Parliament where they have recommended removal of the SPC is being blamed on the MERA Board as the source PAC recommendations.
“MERA through the Ministry of Energy is a signatory and member of Regional Regulatory bodies including Regional Energy Regulating Association (RERA), Regional Association of Energy Regulators for Eastern and Southern Africa (RAERESA) and African Forum for Utility Regulators (AFUR).
“All these bodies advocate for independence of local Energy Regulatory bodies from political influence or any other sources. It is unfortunate that the events affecting MERA Board have the potential to downgrade the credibility of MERA amongst its peer’s regional bodies.”
Having carefully considered all these matters that he has highlighted, Chikadya said he has “concluded that the best decision is for me to resign as Director and Chairman of MERA with immediate effect”.
“I have invested a significant amount of effort to build my professional career for many years, and I would not want a Non-Executive position of Directorship of a State Owned Institution that operates based on political influences to destroy my professional reputation.
“I have held numerous Directorships in various organisations including being Chairman of some of the leading institutions in Malawi. Someone who is incompetent would not have such public trust and confidence.
“Going forward, I would like to conclude with a recommendation to PAC. The Committee may wish to consider and initiate a process to amend the Energy Regulation legislation governing the appointment of the Directors of MERA.
“The Energy Laws in Zambia for example provide for professional bodies to recommend members of their professional bodies for appointment as Directors of the Regulatory body.
“In our case, Directors of MERA would come from The Law Society, The Institute of Chartered Accountants, The Economics Association of Malawi, Board of Engineers, and the Malawi Confederation of Chambers of Commerce and Industry etc.
“I wish my entire fellow Directors all the best. May God bless MERA and our country Malawi,” the letter said, copied to the Public Appointment Committee, Principal Secretary for Ministry of Energy and MERA CEO Kachaje himself.
The Kachaje saga followed the resignation of MERA board member, Pempho Likongwe soon after Richard Chapweteka dragged Likongwe’s name in the Kachaje case during the hearing before the Ombudsman.
It came to the surface that Chapweteka — who had attended the interviews for the post of MERA CEO — had testified at the Ombudsman accusing Likongwe of revealing the results of the interviews before they were officially announced.
Before the results of the interviews were released, Chapweteka was appointed by President Lazarus Chakwera as Commissioner for Malawi Electoral Commission (MEC), prompting Likongwe to inform Chapweteka not to turn down his appointment because he was not going to be picked as MERA CEO as he “had not performed well and was not going to be appointed”.
In his resignation letter to the Comptroller of Statutory Corporations dated November 15, 2021, Likongwe confessed that he did reveal that Chapweteka failed the interviews and had tried to save his ‘friend’ as at that time Chapweteka was jobless.
After several testimonies that the Ombudsman received that included Chapweteka’s, the Ombudsman ruled that Kachaje’s appointment as MERA CEO was irregular and ordered its cancellation.
But the Ombudsman’s Report also indicated that Chapweteka lied during the hearing where claimed that he was deliberately given low marks despite performing well during the interviews.
MERA’s Board plays a crucial role in determining fuel prices in the country under the recommendation of MERA’s Liquid Fuels & Gas Pricing Advisory Committee after evaluating trends on the Automatic Pricing Mechanism.
The Committee meets every first Tuesday of the month to review the Automatic Pricing Mechanism before submitting its recommendations to the MERA Board and within 48 hours, the Board is supposed to make a resolution on the Committee’s recommendations, as provided in the Liquid Fuels and Gas (production and supply) Regulations, 2009.
The Law provides for a Price Stabilisation Fund (PSF) at 5% of in-bond landed cost (IBLC) in which prices are reviewed upwards if the change in IBLC is above 5% and downwards if it is below 5%.
Then when the change is below 5%, the difference is channelled into the Price Stabilisation Fund to cushion fuel prices should there be an increase within the -5% benchmark.
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