Escom tariff hike faces challenge

Consumers Association of Malawi (Cama) is challenging the 30.6 percent electricity tariff hike effected on January 1 as approved by Malawi Energy Regulatory Authority (Mera) Board and wants the court to stop its implementation.

Mera has given Electricity Supply Corporation of Malawi (Escom) the 30.6 percent tariff hike effective New Year’s Day which will see consumers paying K53.69 (about $0.07) per kilowatt hour from K40.69 (about $0.05).

In an interview yesterday, Cama executive director John Kapito confirmed filing an application for an injunction against the hike.

He said: “We filed an application to the High Court registry in Lilongwe last week on the same and we are still waiting for a court decision on the matter.

“As a consumer rights watchdog, we feel that Mera is not justified to raise the tariffs at the moment when the utility body [Escom] has failed to deliver most of the key performance indicators necessitating further power hike.”

While confirming Cama’s application, Judiciary spokesperson Mlenga Mvula on Wednesday said the High Court has since settled there should be an inter-partes hearing.

He said: “Indeed Cama had applied for a court injunction against Mera and Escom implementing the tariff hike last week. Today [Wednesday], when the matter was brought before Justice Esmie Chombo of the High Court in Lilongwe for hearing, she ordered for an interpartes hearing on the matter.”

However, Mvula said a final decision on the matter will depend on the two parties’ commitment to the case.

“We cannot, however, say as to when the matter will be resolved since there is need for the lawyers for the two parties— Cama and Escom/Mera—to meet over the matter and draft the way forward but if they do it quickly, the matter will also be resolved quickly,” he said.

Two weeks ago, Mera Board chairperson Dingiswayo Jere said in a statement Mera approved the tariff hike after considering the impact of inflation rate and exchange rate movement that resulted in a 6.6 percent increase.

The statement said during its meeting on December 2, the Mera board noted a further depreciation of the local unit to K612.38 against the United States dollar and that inflation rate also went up to 24.7 percent in October 2015 as computed by the National Statistical Office (NSO).

Reads the statement in part: “The general public will recall that, as required by law in section 198 [1] of the Electricity By-laws 2012, and the Tenth Schedule to those by-laws, electricity tariffs must be adjusted through the Automatic Tariff Adjustment Formula [Ataf] when the net effect on the changes in inflation and exchange rate go beyond the plus or minus five percent trigger limit.

The tariff which was beyond the statutory plus or minus five percent threshold for revising tariffs and therefore the electricity tariff qualified for an upward adjustment.”

In an earlier interview with The Nation, Economics Association of Malawi (Ecama) executive director Edward Chilima predicted that electricity tariffs were set to be raised owing to the sharp weakening of the kwacha and rising inflation.

He, however, urged Escom to embrace the public sector reforms that are currently being championed by government, observing that there are a number of inefficiencies in the management of parastatals.

In Malawi, electricity tariffs are expected to be reviewed every four years and since 2008, there have been two electricity tariff reviews. The first was from 2009 to 2013 and the second from 2014 to 2017.n