Malawi electricity tariffs to keep rising – Escom

Malawi Electricity Supply Corporation of Malawi (Escom) has said the country’s electricity tariff will keep rising until the parastatal starts profiting from the production and distribution of electricity.

Escom recently raised the electricity charges by 29 percent to the surprise of users who to the contrary were of the view that the price would go down due to the appreciation of the country’s currency and the Energy Efficient Lighting Programme (EELP) that saw the installation of energy saver bulbs in residential areas.

Electricity tariffs adjustment brought to rife speculation that Escom wanted to making up for revenue lost from the adoption of energy saver bulbs. The corporation however, refuted the allegation.

Escom’s Communications Manager, Kitty Chingota told a group of Southern Region  District Information Officers (DIOs) from the Ministry of Information on a World Bank funded project familiarization tour that the parastatal sells its power at a loss and that the tariff increases will go on so that the organization ‘breaks even.’

Chingota: We sell electricity at a loss
Chingota: We sell electricity at a loss

“Basically, the increase in tariff is meant to get to a point where the cost of electricity production will equal charged tariffs,” said Chingota.

She said the corporation is operating at a low cost as it is presently charging K6 per one unit of electricity which is produced at the cost of K12, representing half the production cost.

She said the utility company cannot survive in business with such an imbalance adding that the price will keep increasing until a time when Escom will start to operate as a profit making organization.

Commenting on the issue, the corporation’s chief systems planning engineer, Andrew Senzani said the corporation needs to keep increasing its charges to keep up with the country’s devalued currency and the ever increasing cost of production.

He said despite being offered the same costs, like any other company from the rest of the world when buying equipment, the country’s electricity charges still remain lower compared to other countries.

Asked whether Escom would reduce the price of electricity due to the recent appreciation of the Kwacha he said the issue depends on an agreed formula with the Malawi Energy Regulatory Authority (Mera) which determines the actual decrease and increase.

Said Senzani; “We go by an agreed threshold. If the effect of devaluation goes outside the agreed window, then we implement an upward adjustment but if the Malawi Kwacha appreciates outside that window we do downward adjustment.”

Escom’s director of Planning and development, Lameck Mchembe said with the current tariffs, the corporation cannot carry out operation improvements that would necessitate expansion.

“We are not able to realize sufficient revenue that would help invest in expansion like building new power stations. The current tariffs can only meet costs of maintenance and other smaller costs,” said Mchembe adding that the corporation needs to have a higher tariff to meet expansion demands if it is to stop heavily relying on donor funds.

He said if the country limits electricity tariffs to a level that everyone is comfortable with then the company will not develop unless there is a change in revenue inflow.

Asked on how the organization is coping with vandalism that has almost threatened its existence, Senzani said the corporation is devising other means apart from sensitizing communities on its dangers.

Quizzed further on the means, he revealed that the organization is currently exploring the possibility of sealing all drain valves on transformers to prevent oil siphoning.

In addition, he said the corporation is also looking at prospects of instating a sensor on transformers that would register the levels of oil and sound an alarm whenever it goes low.

Escom is implementing an US$84.7 million World Bank project that will see the refurbishment of its generation, production and distribution of its system that will see the renovation and upgrading of some of its power stations, establishment of new substations, and the exploration of possibilities of establishing new generation sites through feasibility studies.--Malawi News Agency

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