Ministry of Natural Resources, Energy and Mining has said discussions are on-going between the ministry and Independent Power Producers (IPPs) following the signing of memorandum of understanding (MoU) between the IPPs and Electricity Supply Corporation of Malawi (Escom) on Term Sheets – a prelude to signing of Power Purchase Agreements (PPAs).
The ministry’s statement contradicts recent reports of a stand-off on the electricity deals with IPPs most of whom have approached government and the Malawi Investment and Trade Centre (MITC) on possible investment in the country’s power sector.
Following the liberalisation of the electricity supply industry in 2003 coupled with the formulation of the integrated National Energy Policy (2003), and the recent government drive to encourage private sector participation, most IPPs are willing to invest in the power sector.
Department of Energy spokesperson Joseph Kalowekamo said the reported deadlock on the electricity deal is not only misleading, but also could potentially create panic among the citizens and prospective investors in the electricity supply industry.
“To show commitment, a number of them [IPPs] have ended up signing MoUs with the government. In November, 2015, the Ministry published in the local papers and made available to the public a list of the IPPs that have so far signed MoUs with the government,” said Kalowekamo.
Out of the 17 IPPs that had signed the MoUs with Government of Malawi, Kalowekamo said only one IPP signed in 2011 while the rest signed the MoUs in 2015 and are at different stages of project implementation.
“Some of the IPPs have proceeded to conduct pre-feasibility and feasibility studies that would inform investment requirements and subsequent PPAs to be entered into with off-takers, including Escom,” he said.
Generally, according to law, IPPs are expected to negotiate with an off-taker, in this case Escom, on tariffs and once a PPA is signed between Escom and an IPP, the latter is expected to apply to the Malawi Energy Regulatory Authority (Mera for a tariff approval and issuance of a generation licence for them (IPPs) to proceed with the project.
To date, no IPP has signed a PPA yet with Escom as negotiations are ongoing, said Kalowekamo.