Escom’s tariff hike plan faces hurdles
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and Consumers Association of Malawi (Cama) say Escom has no moral ground to raise electricity tariffs by 68 percent.
The two organisations expressed their sentiments yesterday in Blantyre during the first regional public hearing convened by Malawi Energy Regulatory Authority (Mera) to discuss Electricity Supply Corporation of Malawi’s (Escom) four-year second base tariff proposal.
In his presentation, MCCCI chief executive office Chancellor Kaferapanjira said the tariff hike from K73 per kilowatt per hour (kWh) to K123 per kWh is not a bad thing as long as matches with the delivery of service.
He warned that the 53 percent proposed increment in the first year will have negative implications on the industry as well as consumers.
“When you look at the major causes of the increase, which is the increase in purchase price from producers which has gone up by 50 percent, we think there is need to find out what constitutes the 50 percent because if indeed electricity will increase by 53 percent in the first year, it will harm the industry and this will in the end be passed on to consumers,” said Kaferapanjira.
He said Escom should not increase tariff increase because of its bad debts, adding that consumers should only pay for the electricity they have used.
“Government is said to be the number one culprit for not paying debts. Escom should not factor this in as cost of electricity because at the end of the day what government is consuming is actually built in as what is being consumed by individuals,” he said.
A few months ago, Escom asked for a K58 billion bailout from Treasury to enable it provide reliable electricity, but Treasury rejected the proposal arguing that doing so would collapse the economy.
Kaferapanjira said there is also an exaggeration in terms of general expenses, especially salaries, adding that at the end of the day, these salaries will be paid by consumers.
On his part, Cama executive director John Kapito also protested Escom’s proposal, arguing it is unjustifiable considering the current state of the energy sector.
“We find it stupid for anybody to hike the price of something you do not have.
“Right now, Malawians don’t have electricity and someone is waking up today to say we are increasing this product which does not exist. This to us an insult, a joke and unacceptable,” he said.
But Ministry of Natural Resources, Energy and Mining director of energy Joseph Kalowekamo backed the increment, saying it will attract private sector participation in the industry.
“We need to adjust electricity to a level that will attract private sector participation because we believe that bringing in the private sector in the industry will bring about competition which in the end will bring the cost down,” he said.
In the base tariff proposal which Escom submitted to Mera on April 20 2018, the power utility said the average cost of supplying electricity is K126 per kWh, according to the 2018 Cost of Service Study.
