Consumer Association of Malawi (Cama) says it is hoping for relief on failure by utility supplier Electricity Supply Corporation of Malawi (Escom) to meet its key performance indicators (KPIs) of the base tariff period.
Cama executive director John Kapito said failure to meet some specified KPIs ) during the first quarter of the base tariff period from October 1 2018 to December 31 2018 warrants consumers to get financial relief from the utility supplier.
He said: “What is key from my knowledge is that any failure on the part of Escom should be given penalties which will pass on to consumers like reduction of tarrifs.
The understanding from the beginning was that there should be a penalty to Escom in case of failure to meet targets which should be passed on to us.
“As such, we expect the energy regulator to tell us on the penalties that Escom is getting on this so that they should compensate us while at the same time motivate Escom to work much harder.”
According to an update, Escom has failed to meet most of the KPIs during the first quarter of the base tariff period from October 1 2018 to December 31 2018. The KPIs were set to track performance following the four-year base tariff which was awarded to Escom to finance operational expenditure and infrastructure investments for improved and sustained service delivery.
Among others, Escom has failed to meet connection targets for new customers of 22 500, connecting only 8 960; fell short of collecting K46.2 billion in revenues by K10 billion, fallen short of selling 525 kilowatt per hour (kWh) units, only selling 372.8; and failed on collection efficiency and average debt collection period mainly due to challenges in collecting from government and quasi government institutions.
Escom has also failed to establish a special fund within 90 days from the base tariff effective date which was meant for proceeds from asset revaluation process that would be used for mantainance, replacement and enhancement of existing assets.
Escom spokesperson Innocent Chitosi was yet to our questions by the time we went to press.
However, Malawi Energy egulatory Authority (Mera) chief executive officer Collins Magalasi said while continued missed target could push the regulator to review the tariffs in the interest of the consumer, there are other penalties that can be effected before it gets to the price reduction revision.
“After this performance review, we will conduct a follow up review for the second quarter to see if Escom has improved. Otherwise, we will question them to understand why they are failing to meet the targets. Mera has every power to review its tariff hike decision based on the KPIs which are not being met as earlier agreed.
“But even before we reach to that stage, there are other instruments that we use to ensure compliance such as penalties,” he said. In October 2018, Mera aproved a 31.8 percent third base tarrif increase to be implemented by Escom from 2018 to 2022. This translated into an average tarrif increase of K95.15 per kilowatt hour (kWh) up from K73.23 per kWh over the four year period. The tarrif would be increased proportionally by 20 percent, seven percent, negative three percent and 10 percent in year one, two, three and four, respectively.