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.

A lady waiting for electricity in her saloon -.Photo Jeromy Kadewere

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.

Follow and Subscribe Nyasa TV :

Please share this Article if you like Email This Post Email This Post

More From the World

  Subscribe  
newest oldest most voted
Notify of
Johane
Guest

The fact is Malawi has one of the cheapest electricity rates in the world. and we’re by far not the cheapest producer. It’s not sustainable.

-It’s either you pay a more for electricity and get power all day with new power being added to the grid every year
OR
-continue paying cheap prices and enjoy never-ending blackouts

This is how the real world works. Results cost money

M'Malawi Weniweni
Guest

As a low power user at 20-25 kWh, at K250 per kWh my monthly bill will range from K150,000 to K187,500. That is a sure way to collapse the boma.
These Independent Power Producers were eying at making a killing in the electricity market. This is similar to what is happening in Telecommunications and Banking.
Any government that can allow that to happen to the power sector would dig its own grave

Johane
Guest

I think your arithmetic is off. 25kWh per month at K250 per Kwh is K6,250 nothing close to +K100,000. But I agree, K250 is too high for low users. What makes sense is a highly stratified system where the first 50KWh is charged at around K50 per kWh and then sharply increase that to about K200 for very high usage

johnbwanyama
Guest

K250 per unit meaning K1000 .00 should buy 4units that does not add up it means no one will afford buying electricity in our country. Let Engeco invest in South Rukuru which has potential of generating more than what the country need and no problems of weeds and sedimentation

Khima
Guest

The energy problem is bigger than izi zomangolubwalubwa…we need a huge consolidated solution

Awize
Guest

24hrs*31 days=744 hrs
744hrs* K250/hr= K186,000 per month. How many people can afford to pay this amount for power alone every month? Nanga madzi, everyday living costs? Minimum Wage per month is less than K30,000.
I think Govt must raise minimum to be around K200,000 though hyper-inflation but still if jobs are available, then economic hardships canNOT be severely felt. The Govt must be overhauled completely to our economy to work reasonably.

More From Nyasatimes