Escom considers new tariff model

The Electricity Supply Corporation of Malawi (Escom) is considering on adopting a cost-reflective tariff model to sustain its operations on the market.

Alexious Chiwaya: Escom CEO

Escom Chief Executive Officer, Allexon Chiwaya told the local media that they did a cost of service study on how much it costs to produce one unit if electricity and whether it’s selling price matches with cost price.

“We wanted to find out how much it costs Escom to produce one unit if electricity and we must sell that unit above the cost of production for us to be sustainable. But it has been proved that we are selling below that cost.

“So, we are going towards cost reflective tariffs where we will be selling at the two price of electricity, but this will be after consultation. Right now, Malawi Energy Regulatory Authority [Mera] is conducting nationwide sensitization with stakeholders,” said Chiwaya.

For instance, he said the power supplier has been supplying Likoma Island through use of diesel generators which costs an average of K32 billion a month while it is getting K500 000 in revenues for the same duration.

The Southern Africa Development Community (Sadc) Energy Ministers Conference in 2008 agreed to implement cost reflective tariffs by 2013. Two years later, only two out of 15 countries reported to have attained cost reflective tariffs. The attainment of cost reflective tariffs target was later shifted to 2019.

Under the $350.7 million  (about K256 billion) energy compact sponsored by the United States Millennium Challenge Corporation (MCC), the Malawi government committed to a phased implementation towards a full cost reflective tariffs under the power sector reform.

Malawi is among countries with lowest rates of installed electricity capacity in Southern Africa with its penetration at a paltry 10 percent. According to the World Bank May 2018 Malawi Economic Monitor, at K57.72 per kilowatt per hour [kWh] or $0.08/kWh, which is not fully cost reflective, electricity tariffs in the country are lower than the average for sub- Sahara Africa which is at $0.14 kWh.

Escom is yet to effect a deferred 6.72 percent tariff adjustment which was supposed to be effected in November 2016, and its board chairperson Thom Mpinganjira said this means two years of lost revenue.

Consumers Association of Malawi (Cama) executive director John Kapito, while protesting the proposed model, said adopting cost-reflective tariffs will only push up the cost of goods and services, which has heavy implications on  consumers’ disposal income.

As at December 31 2017, Escom registered a loss after-tax of K6.3 billion and it is projected that by the end of the financial year, the firm will have registered a profit after tax of K149.1 million.

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Uyo Munkhungu
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Uyo Munkhungu

You want the consumer on the mainland to pay for power consumption on Likoma Islands? When ESCOM was installing the Diesel Generators at that cost, did they expect to get adequate revenues from the supply of power to such a small population? There are a lot of options that could have worked at much lower costs but typical to Malawians, they were never explored. Now we are running the whole country on leased standby generators. Pathetic!!

ILLEGAL IMMIGRANT
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ILLEGAL IMMIGRANT

ESCOM MACRA MRA COUNCILS
DPP NDALAMA KUBERA WANTHU KOMA MULUNGU MUWELENGE

Youna
Guest
Youna

Tangonenani kuti mukukonza zokweza magetsi as a way of refunding that money stolen by those people. Tikhapeni mmene mungathere, ife tingataninso. Koma zindikirani kuti one day muzamva pain.

Mzanga Dausi Now In Domasi
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Mzanga Dausi Now In Domasi

Kwezani mmene mungafunire, but know one thing. Malawians are now slowly but steadily producing more of their own electricity using solar energy.

Soon that organisation will be useless as a viable means of accessing electricity. More so with the visionary Chakwera’s approach of providing state subsidy on solar panels.

CHE WISIKI
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CHE WISIKI

Mwachidule a ESCOM akuti tiyeni mwaunyinji wathu tibweze makobili aja aba anthu amenewa

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