ESCOM slowly dying; Parliament needs to approve raising consumers’ power tariff—CEO

Since Electricity Supply Corporation (ESCOM) was unbundled in 2018, it has made a cumulative loss of revenue of over K112 billion when it buys power from Energy Generation Company (EGENCO) and recent independent power producers (IPPs).

This was disclosed at a press conference in Blantyre on Tuesday by ESCOM Chief Executive Officer (CEO), Kamkwamba Kumwenda, saying EGENCO and the IPPs charge K140 per kilowatt/hr, yet ESCOM charge the same kilowatt/hr at K104 from the end user, the consumer.

Kumwenda with some members of his management team at the press conference

He added that unless Malawi Energy Regulatory Authority (MERA) gets the jurisdiction from Parliament to increase power tariff to over K140 per kilowatt/hr, ESCOM faces a bleak future since it will forever be making losses to the extent that it shall even fail to pay its staff’s salaries.

Kumwenda was responding to a statement made by Democratic Progressive Party Member of Parliament, Welani Chilenga — who is chairperson of the august House’s Natural Resources and Climate Change Committee — when he accused ESCOM of charging a “ghost contract” on Malawian consumers at K3 per kilowatt/hr from the K104.

Chilenga told the media that despite the terminating the diesel powered power generators with Aggreko in April this year, consumers are still being charged the K3 per kilowatt/hr tariff which was meant for the power back up service.

Werani Chilenga MP

The MP, who is former deputy Minister of Energy in the DPP administration, told the Nation newspaper that ESCOM should be transparent on the issue, saying with the continued power outages, it would have been better if another company was engaged to run diesel gensets.

Chilenga further indicated that Malawians pay over K1 billion per month as tariff for the diesel power generation for the terminated Aggreko contract but Kumwenda said that percentage was set aside to be used to buy gensets for EGENCO — to be owned by the citizenry and not to benefit foreign companies.

Kumwenda said he called for the press conference, saying he was being transparent now to declare that “ESCOM is slowly dying” and there was need for MERA to push Parliament to approve raising power tariff.

He disclosed that ESCOM is bearing the brunt of the high costs it incurs from EGENCO and the other foreign private investor IPPs, who charge in dollars.

He indicated that the tariff regime that was rolled out in 2018 is expiring in September and MERA and Parliament should consider revising it in the same way fuel price adjustment is treated through the automatic price mechanism.

He also disclosed that when negotiating with the foreign IPPs for tariff charges, Power Market Limited (PML) — that was created when ESCOM was unbundled as a single buyer — does not involve ESCOM nor MERA but just agrees to contracts.

“If we were to be involved, we could have negotiated for charges that ESCOM can handle, or which can be used by Members of Parliament to adjust cost effective tariffs that reflect the situation on the ground.

“If Hon. Chilenga and the MPs do not act now, ESCOM might close shop because we are failing to provide some services because we don’t have the cash flow. We are failing to effectively provide new connections because we can’t afford to buy new materials; we can’t upgrade our distribution infrastructure.

“We have lost lost over 400 transformers across the country due to vandalism as well as many other infrastructure materials; we can’t effectively respond to faults because of lack of materials and sometimes fuel — that’s why I can say that ESCOM is slowly dying,” Kumwenda said.

He said MP Chilenga is very much aware of all these challenges that ESCOM is facing as a former deputy Minister of Energy and it was insensitive on his part for making incorrect statement that can likely incite public fury against the power utility service provider.

He emphasised that with or minus the K3 tariff on the gensets was to be removed, ESCOM would still need to have the overall consumer tariff  increased by K60-K70 per kilowatt/hr to offer the best services to the nation that include providing for new connections to generate more revenue and upgrade the distribution network — whose infrastructure is outdated.

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