Malawians will have to dig even deeper into their pockets to access electricity which will see its price increasing by 13.7 percent from the current average of K35.69 to K40.59 per kilowatt-hour effectiveNovember 1 2015.
The tariff adjustment, announced today in Lilongwe at a news conference, has been approved by the Malawi Energy Regulatory Authority (Mera) after considering the performance of the Electricity Supply Cooperation of Malawi (Escom) and its request to implement a second tranche of 18.39 percent.
According to law, electricity tariffs are reviewed every four years and since Mera Board was elected in 2008 there has been two electricity base tariff reviews.
The first base tariff increase was for years 2009 to 2013 while the second one is being implemented in phases during the years 2014 to 2017.
Today’s announcement on electricity price hike comes on the back of another tariff increase of 13.5 percent which the Mera board approved for the first year and was implemented with effect from 4th April, 2014.
Reacting to the latest price increase in electricity, Consumer rights activist John Kapito queried the move by Mera saying Escom has failed all the key performance indicators necessitating further electricity price hike.
Said Kapito: “If this tariff adjustment is restricted to the automatic price adjustment formula which also looks at the depreciation or value of the Kwacha then we don’t have a problem. But if this hike is tied to the key performance indicators of Escom, then we have a problem and its wrong.”
But Mera board chairperson Dingiswayo Jere explained that Mera has reviewed the impact of the movements in the macroeconomic fundamentals of exchange rate and inflation before effecting the hike.
Jere added that the impact of the depreciation of the Kwacha and rising inflation over the period has eroded the value of the current average electricity tariff from K35.69 which was equivalent to $0.9 in April, 2014 when this tariff increase was being implemented to $0.6 in September,2015.”
Besides, Jere said Escom has also continued to improve on its financial position in the tariff implementation period ending June 2015.
He also clarified that that the 13.7 percent electricity tariff increase is part of the 18.39 percent increase which the energy sector regulator approved with effect from 1st July, 2015.
“The approved tariff is intended to catalyse a financially health and self-sustaining electricity sector that is capable of generating sufficient revenue and credit worthiness for Escom at fair and reasonable tariffs to end users,” added Jere.
Commenting on the same, Economics Association of Malawi (Ecama) Executive Director Edward Chilima said it was expected for electricity tariffs to go up in view of the recent sharp weakening of the local currency and rising inflation.