The fuel crisis in recent weeks has moved into centre stage in the Malawi Economic crisis.
While the fuel crisis has generated a lot of noise and press coverage, the electricity crisis is increasingly seen as a sideshow.
Malawi’s fuel problems are widely known and the consequences of the crisis are felt everyday by the numerous motorist stuck in never ending fuel lines across the country.
And despite a small portion of Malawi’s population having access to electricity as most people depend mainly on firewood, charcoal and other forms of biomass for their energy needs, the Electricity problem has an equally greater impact to derail Malawi in its road to economic recovery.
Why do we have frequent power blackouts?
According to a previous World Bank report, one of the main growth constraints in Malawi is a significant shortfall in electricity supply. Load-shedding (planned power cuts) and unannounced outages are frequently used to ration power supply by the Electricity Supply Corporation of Malawi (ESCOM).
The electricity supply has also been recognized as a factor in deterring investors, and in a weakening the competitiveness of local industries. This has resulted in reduced production and a number of companies closing shops. This is having an impact on the number of people being unemployed.
About 98.5% of Malawi’s electricity supply is generated from hydroelectric plants operated by the Electricity Supply Corporation of Malawi (ESCOM). ESCOM is a parastatal utility, holding a de facto monopoly over the generation, transmission, and distribution of electricity. Transmission and distribution losses are unsustainable estimated to be about 20%. It’s the poor Malawians who bare the cost of these losses through increased power supply hikes.
Furthermore, ESCOM does not have the capacity to produce enough Electricity to meet the demand in the local economy. Their electricity production is already lower than the current available demand without taking into account losses in transmission and distribution.
Increasing the amount of Electricity produced by ESCOM is the first step in curbing the electricity crisis. Production or generation will not only need to meet the demand available in the economy but also be at a surplus. The excess produced electricity if it can not be stored, can be exported to other countries such as Zimbabwe and Zambia generating forex revenues for the local economy.
Indeed increasing production is not an overnight endeavour. There would need to be a greater need to investment into finding new energy generation means as well as increasing the capacity of the existing hydroelectric plants operated by ESCOM.
The Government of Malawi does not need to be in the forefront of putting forward this capital investment. The best way of achieving the same result is to deregulate the Electricity industry. ESCOM in its present form is a Monopoly not only involved in generation, transmission and distribution but also the marketing, servicing and logistics of making the electricity industry machine to function.
This is not cost effective. The Government needs to liberalise some aspects of this industry if not all. Private companies should be allowed to generate, transmit and distribute electricity. This will create competition in the industry which will be good for the general Malawi public as it will drive down prices and would eliminate the losses in distribution and transmission.
The Government can generate a lot of money by selling the assets of ESCOM which can be used to develop other energy generating industry. Local and Foreign entrepreneurs can then be given the chance to run the industry efficiently which would not only help to bring back investors but also improve the competitiveness of our local industries.
*The author Dumisani Kapanga is a student at Glasgow Caledonian UniversityFollow and Subscribe Nyasa TV :