Malawi has developed a standard power purchase agreement that will be used as a model in striking deals with the independent power producers (IPPs).
Malawi Energy Regulatory Authority (Mera) CEO Raphael Kamoto says the agreement was developed after benchmarking against countries in the Southern African region.
Says Kamoto: “In addition, Mera sought com-ments from stakeholders in the electricity sector in Malawi through consultative meetings before developing the standard agreement.
“The agreement is one of the important legal tools that will guide sellers and purchasers of electricity in negotiating and drafting their power purchase agreements.”
He says the agreement, which incorporates minimum legal, technical and economic obliga-tions for sellers and buyers of electricity, is aimed at facilitating the creation of favour- able environment for IPPs to invest in the country.
Kamoto says the standard agreement will ensure that there is a reduction in the trans-actional costs that may be incurred by sellers and buyers of electricity when drafting and negotiating their power purchase agreements.
“Mera believes that the development of the standard power purchase agreement will provide the much-needed impetus for IPPs to start investing in Malawi,” he says.
Malawi is currently wooing IPPs into its power sector in a bid to meet the country’s growing electricity demand.
Electricity generated by the Electricity Supply Corporation of Malawi, mainly at power plants on the Shire river, stands at 251 MW, compared with total demand of 250 MW.
Demand is, however, growing rapidly owing to population growth and the development of projects, including those in the mining industry.
Malawi projects that demand for electricity will reach 598 MW in 2015, 874 MW in 2020, 1 193 MW in 2025 and 1 597 MW in 2030.
According to government officials, several IPPs have shown interest in starting operations in Malawi, including Australia’s Intra Energy, which is to develop a 120 MW coal-fired power plant at Chipoka, in the south of the country.
Intra Energy will use coal from its Nkhachira mine, in the Keyelekera area.