Minister of Finance, Economic Planning and Development Goodall Gondwe has announced plans to provide adequate resources and introduce tax incentives to stimulate investment in the energy sector to guarantee uninterupted power supply.
Speaking when he presented the proposed K1.3 trillion 2017/18 National Budget in Parliament last Friday, the minister admitted that the pace of development in the country has been stifled as a result of inadequate power in the country.
To that end, Gondwe said government will in this budget and subsequent financial plans provide adequate resources, in collaboration with the country’s development partners to ensure that there is revolutionary growth in energy generation transmission and distribution.
The sector has since been allocated K12.7 billion.
“The energy sector will be another sector of focus in this budget and other budgets to come. This is because as Mr. Speaker, and honourable members are aware, energy is what is going to unlock our nation’s development potential. Our pace of development as a country has, thus far, been stifled as a result of inadequate power in our country,” he said.
Gondwe added: “We will achieve this by providing on-grid and off-grid power from both renewable and non-renewable energy sources. We will also put in place tax policies and incentives to achieve two objectives: firstly, that Malawi is an attractive destination for private sector investment in the power sector; and secondly, that electricity is affordable especially to rural communities.”
The minister was upbeat that the government, after parliamentary approval, will be signing a financial agreement with Exim Bank of China which will see the commencement of Kam’mwamba Coal Fired Power Project that will add 300 megawatts (MW) to the grid in three years’ time.
The project, once completed, is expected to double the current power supply in Malawi.
Besides, Gondwe is also hopeful that government with support from the World Bank and African Development Bank through institutions such as the Multilateral Investment Guarantee Agency (Miga) will facilitate the signing of Power Purchase Agreements between Electricity Supply Corporation of Malawi (Escom) and other Independent Power Producers (IPPs) to increase its current generation capacity.
Prior to the budget presentation, professional bodies, economists and even non-economists, including consumers, cited electricity as a major threat to the 2017/18 National Budget calling on government to build the budget around energy sufficiency, especially electricity.
Economics Association of Malawi (Ecama) president Henry Kachaje, speaking with The Nation in an interview last week, said the grouping expects government to prioritise energy infrastructure as it is key to industrial development.
Malawi has in recent times been experiencing inadequate power supply and prolonged power outages, a situation which drove power sector reforms and several other interventions championed by government and non-governmental agenciess.
Last year, Escom was split into two entities, Escom—the residual Escom—and Electricity Generation Company (Egenco)— a generation company as part of the power sector to improve generation and distribution infrastructure.
This was part of the power sector reform project, a component of the $350.1 million (about K242 billion) United States of America (USA) government–funded Millennium Challenge Corporation (MCC) energy compact that seeks to improve generation and distribution infrastructure.