‘Energy compact had positive impact’

In this interview Minister of Energy NEWTON KAMBALA assesses the impact the $350.7 million (about K257 billion) Millennium Challenge Corporation (MCC)  energy compact has had on the energy sector amid reports that despite completing the infrastructure works on time, it fell short of achieving its objectives to improve the availability, reliability, and quality of the power supply. He speaks to business reporter GRACE PHIRI. Excerpts:

What is your reaction to the MCC March 2021 evaluation brief titled Improving Power Quality and Reliability in Malawi, which shows that the energy compact fell short to improve power availability, reliability and supply?

First, note that the compact works were substantially completed in September 2018. Although the report has been released in March, 2021, the actual survey upon which the report is based was done between October and December, 2019. That’s exactly one year after completion of the works. If another evaluation was to be carried out today, the report would be different as the situation on the ground is significantly different.

Secondly, the compact had two main components; Infrastructure Development and Power Sector Reforms—both of which have contributory impacts on the overall objective of the compact; hence, the effectiveness of the compact should not be analysed by considering each component in isolation.

Third, in view of point above, the evaluation report clearly outlined the reasons why the situation in the first year of evaluation was like that.

The Infrastructure [component] under the compact provided a highway or a backbone upon which other supporting systems are to be and shall be built. Hence, full realisation of benefits from the compact is and shall be continuous over a long time horizon depending on the progress of the other supporting systems and structures. In other words, most of the benefits are long-term.

In short, it should be noted that the overall compact goal was to reduce poverty through economic growth in Malawi with specific objectives being:

• Increase investment and employment income by raising the profitability and productivity of enterprises,
• Expand access to electricity for the Malawian people and businesses, and improve delivery of social services.

Since the MCC Compact works were completed and commissioned, have there been tremendous improvements in power supply in the country?

Let me highlight and emphasize that ever since the MCC Compact works were completed and commissioned to-date there have been tremendous improvements in the power sector in general and in Escom’s transmission and distribution in particular and the government is forever grateful to the invaluable investment which the American Government made.

We, as government, can confidently state that the compact has and shall continue to have positive and great impact on the Power Sector in Malawi.

What are the significant and verifiable benefits of the compact on the ground?

Since September 2018, there have been a lot of significant and tangible benefits that the compact has brought to the overall Escom system as follows:

• Although the Phombeya – Nkhoma 400kV line is not being used to its full capacity yet, it is worth noting that its introduction into the network has currently contributed to the overall reduction of transmission losses. Also note that full benefits from this line will be realised upon completion of the Mozambique-Malawi Interconnection project which is currently ongoing.
• With respect to system reliability, the Lilongwe ring has brought about tremendous reliability in Lilongwe City with practically no transmission line outage ever since the installation of the new ring on steel towers. Previously there would be at least 4 planned outages of around 9 hours duration and around 3 permanent faults per year from 2016-2017 with an average fault duration of 7.2hours. All these negative occurrences have since been reduced to minimal levels.
• With respect to system stability, once again the Central and Northern regions of Malawi have benefited a lot.
• The negative trends for the faults would have been worse if we did not have the Chintheche – Luwinga – New Bwengu on new towers.
• Maintenance cost for Lilongwe ring which were being budgeted at K36 million have reduced to the region of K20 Million in maintenance materials.

What will be the major benefit of the compact?

A major benefit of the compact is the preparatory works for power interconnectors. The Mozambique-Malawi interconnection is set to land at Phombeya with just the landing bay because everything is in place since it was installed under the Compact.  Additionally, the Zambia 400kV interconnector will land at Nkhoma also with just landing bay.

Lastly, what impact has the compact brought on power availability?

Increased power availability entails either increased generation capacity or available power trading opportunities. The MCC Compact provided an opportunity for both increased power generation and power trading avenues by creating a level field for coming in of IPPs and also providing landing stations for possible power interconnectors.

As it would be appreciated, both these solutions cannot be realised over a short time frame. Currently, at least the following directly connected to MCC Compact projects are ongoing:

l60MW JCM Solar Project (IPP) to be completed by May, 2021

l400Kv Mozambique-Malawi Interconnection project scheduled to be completed in 2023. This interconnection will land at Phombeya Substation

Other projects also taking advantage of the MCC Compact, include the Zambia-Malawi Interconnection, currently at Feasibility and ESIA studies phase, and planned to land at Nkhoma Substation.  There is also the possible future Tanzania interconnector which will land at New Bwengu Substation which is already designed to take in such an interconnector.n