Escom overpriced MW- ZA interconnection deal
The Electricity Supply Corporation of Malawi (Escom) paid more than charged for in a 20-megawatts electricity interconnection deal with Zambia, Nation on Sunday has learnt.
The revelations are contained in a February 2019 report, Building and Unleashing Escom Potential in the New Environment, which we have seen that indict the utility company on its failure to handle procurement, stores, distribution and management functions.
The interconnection deal, in 2018, came at a time when Escom was in deep financial stress – with the 2019 government report describing the utility’s economic standing as near insolvency.
But the electricity supply company, the report, adds decided not only to pay cash but more than charged.
The report also faults Escom’s chief executive officer Allexon Chiwaya for failing to note the overpayment.
“Chiwaya failed to notice and prevent an overpayment of $34.494 to Zambia Electricity Supply Corporation [Zesco]for capital contribution towards the Malawi-Zambia interconnector project at a time when Escom was near insolvency,” reads part of the report which outlines many inefficiencies at the parastatal.
The taskforce report, led by the Comptroller for Statutory Corporation Stuart Ligomeka, indicates that the initial quotation from Zesco was $783 000 on which Zesco offered a 30 percent rebate, the settlement of which agreed to be staggered in four installments considering Escom’s weak financial position at the time.
But surprisingly, the report notes, Escom “paid $817 494 having instructed the bank to pay K600 000 000 at once, resulting in the overpayment. The staggering of the payment was agreed with Zesco in order to allow Escom meet other financial obligations within its constrained cash-flow”.
Malawi is buying power from Zambia, as it is only able to produce around 320 megawatts (MW)of electricity against a demand of about 600 MW according to the annual economic report (2020). This is a more reason the interconnector project becomes key.
The two countries signed the five-year power deal in August 2018 but the interconnection was commissioned later in December 2018. Zambia has a generation capacity of over 2 700 MW but only uses around 2 100 MW.
The 20 MW from Zambia benefits three Central Region districts of Mchinji, Kasungu and Lilongwe.
Escom chief executive officer, Allexon Chiwaya said during the commissioning of the Chipata-Mchinji cross border connection that the deal was the beginning of the long relationship with Zesco, as Escom was also negotiating for another 50 MW from Chipata to Bunda roundabout and from Chipata to Nkhoma for about 500 MW.
The taskforce report further faults Chiwaya for signing a contract alongside the director for procurement Patrick Liphava to procure polymer insulators worth K897 211.18 from Boss Distributors at a time when Escom had adequate stocks of the same.
When contacted for a comment Chiwaya asked for a written questionnaire and is yet to respond to the concerns.
Escom’s former board chair who is also a commissioner for the electoral body Jean Mathanga alongside former CEO John Kandulu were arrested in connection with a K4 billion corruption probe at the power utility.
workers to prevent overburdening the system.
She said: “Of course, we can never be 100 percent prepared but we will handle it. We will intensify the recruitment of more health workers because it is evident the pandemic is stretching the human resource.”
As of Friday, Qech had 18 “severe and critical Covid patients” including a four-month-old baby and her mother who have both been receiving treatment for the past three weeks.
Since June, Qech has treated over 50 severe and critical patients, the majority of whom have recovered.
