Malawi Borrows US$60 From World Bank to Ease Power Blackouts

The International Financial instotution, World Bank has approved a credit of US$60 million to Malawi to rehabilitate and reconstruct the Kapichira Hydro Power Station that was damaged by Cyclone Ana and Gombe induced floods with the aim of drastically reducing power cuts that the country is experiencing currently.

The credit has beeb given through the International Development Association (IDA) which has approved a credit of US$36 million and a grant of US$24 million from the disaster response window for the emergency power restoration project in Malawi.

Malawi lost its power generation capacity and part of its transmission and distribution network due to Cyclone Ana and Gombe that hit the country early this year.

A letter dated 17 June 2022 from IDA and addressed to the Minister of Finance Sosten Alfred Gwegwe states that the credit has a final maturity of 38 years including a grace period of 6 years and will be on standard IDA terms.

It reads, “The objectives of the project is to rehabilitate and increase resilience of Kapichira hydropower dam and spillways, and transmission and distribution infrastructure damaged by tropical Storm Ana in January 2022 which is responsible for about 23% of the country’s power generation capacity.”

The project will also focus on restoring transmission and distribution lines which were also affected by the natural disaster.

“The project has two components, Kapichira Dam rehabilitation and strengthening and transmission and distribution network restoration.

” Project beneficiaries will include households, busineses, health facilities, schools, water pumping stations, as well as institutions that lost power, ” adds the letter.

The January floods’ effect caused damage to the 129.6MW Kapichira Hydro electric power plant’s dam and spillways, putting the power plant out of oprations.
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects.

The World Bank is the collective name for the International Bank for Reconstruction and Development (IBRD), International Finance Corporation and International Development Association (IDA), three of five international organizations owned by the World Bank Group.

It was established along with the International Monetary Fund at the 1944 Bretton Woods Conference. After a slow start, its first loan was to France in 1947. In the 1970s, it focused on loans to developing world countries, shifting away from that mission in the 1980s.

For the last 30 years, it has included NGOs and environmental groups in its loan portfolio. Its loan strategy is influenced by the Millennium Development Goals as well as environmental and social safeguards.

(1UD= MK1021.92)