Tariff adjustment makes no sense- Kapito

By Antony Isaiah Jr, Staff Reporter……

Consumers Association of Malawi Executive Director, John Kapito has rebuffed the Electricity Supply Corporation of Malawi (ESCOM) for proposing a hike in the electricity base tariffs.

ESCOM through the Chief Operations Officer, Maxwell Mulimakwenda on Monday during the 2023-2027 electric base tarrif application Public hearing in Blantyre, proposed a 69.7 per cent adjustment of the electricity base tarrif.

Mulimakwenda says the adjustment will help the electricity distributing company to operate it’s services uninterrupted.

He said the proposed tariff will be for four years should it be accepted.

“We need to provide continuous and uninterrupted supply of electricity to malawians,” Mulimakwenda.

“Once in place, the adjustment will assist us [ESCOM] to roll out various projects to improve power supply in the country. It will help us to pay the power generators.

“We are proposing this 69.7 per cent tariff hike fo the Malawi Energy Regulatory Authority (MERA) as it will help us a lot. The application includes the activities and costs of generation, single buyer, system market operator, transmission and distribution.

“We have anchored the application to change the tariff mainly on the change of the economic and business conditions since the last base tariff implementation in 2018 and service quality enhancement measures we would like to undertake in the next four years.

“ESCOM as a single buyer, we made the applications on behalf of the electricity industry

“The devaluation of the kwacha over the years, with a major devaluation in May 2022 by the Reserve Bank of Malawi, has contributed to the significant increase in total costs.”

But reacting to the proposal, CAMA’s executive director, Kapito says the increase of the tariff makes no sense as it has come at a time where Malawians are struggling financially.

“When you read the document that they have presented to MERA, you will find that they are really playing around with the minds of the end consumers. They are not going to achieve anything there,’ said Kapito.

He suggested that a 46 percent electricity tariff hike could be ideal unlike the proposed 69.7 per cent. Continuing with his remarks, Kapito accused the ESCOM officials of corruption and called for the disolution of the Electricity Generation Company (EGENCO).

“What we are saying is that it’s either they maintain whatever we had before with no tariff increase before it doesn’t make any sense.

“EGENCO has to be disolved as it is fueling the hiking of the tariff.

“ESCOM is embroiled in a number of corruption and the company has failed to improve. We want consistent supply of electricity in the country.

“Escom needs fo find ways of collecting debts from some government departments including State House and Malawi Defense Force,” he added.

Meanwhile, MERA Chief Administrative Officer, Henry Kachaje said the decision will be made after hearing from the public and he has urged the Malawians to send their suggestions on the matter.

“After submitting their application to MERA, we scritinise it. Those with suggestions, they can send us through the emails,” he said.

If Mera approves the proposal proposed tariff, electricity consumers will pay an average of K177.26 per kilowatt hour (kWh) from the current average of K104.46/kWh.

Justifying its 2023-2027 Electricity Base Tarrif Application, Escom says to deliver on customer and stakeholder priorities over the four years, it will need K1.85 trillion.

It said this will comprise power purchase costs pegged at K915.31 billion, single buyer licensee costs at K22.49 billion, transmission licensee costs at K95.00 billion, system and market operator licensee costs of K40.68 billion, distribution licensee costs at K552.09 billion and stabilisation fund projected at K74.14 billion. There are also levies at K93.28 billion and bad debts worth K53.68 billion.