Vice -President Saulos Chilima has ordered Electricity Supply Corporation of Malawi (Escom) to stop buying diesel for Aggreko to generate the country’s power using generators.
Chilima announced through his Facebook Page after a government stakeholders’ meeting on Friday that he had also given Escom 30 days to resolve the matter with Aggreko.
Said the Vice-President: “It does not make any economic sense for Escom to be buying fuel to supply to Aggreko and then the same Aggreko sells power to Escom using the same fuel that Escom provided. We have advised Escom to avoid signing agreements that do not make financial sense,” he said.
The resolution was made after Chilima met management of Escom, Electricity Generation Company (Egenco), Malawi Energy Regulatory Authority (Mera), the Ministry of Energy and the Public Sector Reforms team.
The Friday meeting followed the one he had on July 22 2020 with the leadership of Escom and Egenco to discuss a two-year roadmap for power generation to achieve steady power supply in the country.
During that meeting, Chilima said he established there were a number of bottlenecks that needed to be dealt with first before coming up with the roadmap.
For example, he said, Egenco presented a number of challenges choking its operations that included billions of unpaid electricity bills sold to Escom and non-conclusive unbundling process that has left Egenco without legal title of assets.
On the other hand, Escom—as a power supplier—also presented several challenges, including the K1.8 billion average monthly bill which Egenco charges but Escom feels the charges are wrongly calculated, therefore, not sustainable.
“This financial and asset dispute in question had been a hanging operational sword on the heads of the two institutions and it seemed there was a deadlock. In fact, Escom was disputing by more than 50 percent the figure that Egenco presented as bill,” he said.
Chilima said on Tuesday next week, Treasury would be meeting Escom and Egenco to spell out the way forward following the resolutions that have been made.
The Vice-President said after resolving the outstanding issues, what remained was putting down a two-year joint roadmap between Escom and Egenco to ensure the current stable power supply is maintained or improved with surplus within the stipulated timeframe.
He said the financial and asset dispute between the two public institutions would be a thing of the past effective Friday next week a development would also bring to an end the whole unbundling process.
Minister of Energy Newton Kambala said Escom owes Egenco about K40 billion in unpaid bills while also spending millions on Aggreko to buy fuel for the generators.
Just like his boss, Kambala also felt the Escom and Aggreko deal was unsustainable and it was high time a more economical source of energy was put in place.
Before government established Egenco, Escom was responsible for both generation and distribution of hydro electric power in the country.