Jul 06, 2012
Malawi adjusts power pricing thinking in bid to attract private developersBack
Escom|Hydropower|Supply Corporation|US’s Millennium Challenge Corporation|China|Malawi|Mozambique|USD|Electricity|Electricity Sector|Electricity Tariffs|Energy|Power Producers|Shire River|Ben Botolo|Bingu|Joyce Banda|Ken Lipenga
© Reuse this
Finance Minister Ken Lipenga said when he presented the country’s 2012 Budget to Parliament last month that the measures included gradually removing subsidies on electricity supplied by Escom to ensure the tariffs were at full cost-recovery levels.
“There has been limited private-sector investment in the power sector in Malawi because electricity tariffs have been set too low. The adjustment of electricity tariffs to full cost-recovery levels will create incentives for private-sector investment in power generation and distribution.”
Lipenga added: “Because energy is the lifeblood of industry, immediate reforms are needed to create a conducive environment for scaling up capacity. In pursuit of this goal, we have increased electricity tariffs by 63.52% so that revenues in the sector are closer to cover- ing the costs of production. This measure is a move towards a more market-determined tariff structure in the electricity sector.
“It is our intention to have a pricing structure that reflects the long-run average cost of producing electricity in order to allow the private sector to invest in further generation capacity.”
Lipenga said the upward adjustment of the country’s electricity tariffs would also assist Escom in raising funds to meet the cost of importing electricity from Mozambique under the planned World Bank-financed Mozam-bique–Malawi power interconnector project.
Malawi, which generates 98% of its electricity from hydropower plants on the Shire river, has an installed generation capacity of less than 300 MW, while demand is around 400 MW and is projected to increase to 700 MW by 2020.
Meanwhile, the Malawi government says it is optimistic about its negotiations with the US’s Millennium Challenge Corporation (MCC), from which it is seeking $350-million for the power sector. The deal was suspended over concerns about poor governance and lack of respect for the rule of law during the previous administration of the late President Bingu wa Mutharika.
Lipenga said, thanks to positive reforms initiated by the administration of the country’s new President, Joyce Banda, MCC had reopened its country office in Malawi and there were high hopes that the US federal agency would resuscitate the grant.
Proceeds from the MCC grant would be used mainly to rehabilitate Malawi’s power plants, which frequently break down, contributing enormously to the country’s electricity woes.
In a related development, the Malawi government says its Kapichira 2 hydroelectric power station will come on stream in August 2013.
The station will add 64 MW to Malawi’s power grid.
Ministry of Energy and Mines principal secretary Ben Botolo says: “We expect to have the machines at the site between August and December this year. The contractor has already worked on the designs and the specifications have been taken to China.”
In other efforts to increase power production capacity, Malawi is implementing the $70-million World Bank-financed Malawi Energy Sector Support Project, which involves a number of surveys to identify and develop potential for electricity generation on a number of rivers in the country, and is also pursuing a project to quantify its coal resources for electricity generation.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines
Other News This Week News
Updated 1 hour 2 minutes ago Employment in the formal nonagricutural sector increased by 16 000 persons, or 0.2%, quarter-on-quarter during the three months ended September 30, to an estimated 8.45-million employees, Statistics South Africa (Stats SA) has found. On a year-on-year basis,...
Updated 1 hour 21 minutes ago The roll-out of e-tolling on Gauteng’s highways has resulted in a “lot of work” for fleet administrators, says Imperial Fleet Management (IFM) CEO Nicholas De Canha. The need to make payments within seven days, every seven days – if not using a prepaid or...
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Mitsubishi Motors South Africa (MMSA) has introduced a 4x2 derivative of its Pajero Sport sports-utility vehicle (SUV), which will give it access to a substantial slice of the full-size SUV market, where it will compete with the likes of the Ford Everest, Chevrolet...
South African Energy Minister Ben Martins has affirmed that the government wants the country to be globally competitive in the nuclear sector. "Our responsibility has always been ... to ensure that, in nuclear energy, South Africa can compete with the rest of the...
Mercedes-Benz South Africa (MBSA) president and CEO Dr Martin Zimmermann describes the new S-Class as “a special place to be”, with the car creating a sense of “wellness” once you are seated inside the German brand’s flagship model. It is difficult to argue...
Water scarcity and water-quality issues are broadly recognised and understood in most political, business and civil organisations in South Africa, but solving water issues will require wide and continuous action in catchments and municipalities by organisations and...
Work is well under way on the R212-million Imvutshane dam, 30 km north-west of Stanger, in KwaZulu-Natal, which is a key link in supplying people in rural Maphumulo with a reliable source of safe drinking water.