Jul 06, 2012
Malawi adjusts power pricing thinking in bid to attract private developersBack
CoAL|Escom|Hydropower|PROJECT|Resources|Supply Corporation|US’s Millennium Challenge Corporation|China|Malawi|Mozambique|USD|Electricity|Electricity Sector|Electricity Tariffs|Energy|Power Generation|Power Producers|Power-generation|Shire River|Ben Botolo|Bingu|Joyce Banda|Ken Lipenga|Power
© 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 (150 word limit)
Other News This Week News
Updated 2 hours 56 minutes ago President Jacob Zuma would next month officially launch the Dube Tradeport, in Durban, as an industrial development zone (IDZ), the Department of Trade and Industry (DTI) announced on Friday. At the launch event, which was scheduled to take place on October 7, the...
Updated 3 hours ago JSE-listed York Timber Holdings on Friday said it expected its operating profit for the year ended June 30 to be between 25% and 30% lower than that of the prior year. As a result of the lower operating profit, combined with a 1% increase in the company’s biological...
Updated 3 hours ago Engineering solutions provider ELB Group has reported an 18% increase in turnover for the year, boosting overall income, from R1.9-billion in 2013, to R2.3-billion for the 12 months ended June 30. Describing this as “a satisfactory result, given the current difficult...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 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 road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
While Ekurhuleni-based transformer manufacturer Reliable Transformers currently designs, manufactures and tests its products according to the SANS 780 specifications for distribution transformers and other applicable transformer specifications, it is working towards...
Global endpoint security solutions company Kaspersky Lab has introduced new measures to prevent cyber criminals from accessing sensitive data, alongside its malware-signature and heuristic device analysis detection methods. Threats to mobile devices have increased...
To ensure uptake and a positive impact, Wireless Fidelity (Wi-Fi) networks in cities must be provided at schools, community centres and commercial centres to enable citizens and government to access information that will improve access to and delivery of services....
Eco-estate Monaghan Farm, located near Lanseria airport, north-west of Johannesburg, has taken a new approach to modern living and sustainability with its 517 ha development, dedicated to farm living.
Forklift and lift-truck distributor Goscor Lift Hi-Reach launched the Genie SX-180, the tallest self-propelled super boom in Africa, in Johannesburg last month. “As the official distributor of the well-known Genie range of equipment in Southern Africa, we are pleased...