High sadc power tariffs scare investors—Rera

The Regional Electricity Regulators of Southern Africa (Rera) says high tariffs associated with electricity generation in the Southern African Development Community (Sadc) are a threat to investment in the energy sector.

Rera regional secretary Elijah Sichome said this on Tuesday in Blantyre during a meeting organised by Rera which started on Monday and ends on September 19.

The main objective of the meetings in Malawi is to provide country updates on recent regulatory and other electricity supply industry developments. The meetings also provides an opportunity to review pertinent regional initiatives such as the Regulatory Empowerment Project and the Independent Power Producers Framework.

Sichome said with an average of 36 percent electrification rate in Sadc and an average of three percent of electricity growth rate, Sadc countries have to do more on [reducing] tariffs if the sector is to grow.

“With the high tariffs, there is no investment climate to bring electricity generation investors on board because the cost of producing electricity is very high,” he said.

Sichome added: “This creates a situation where consumers fail to pay for the services and again, it becomes difficult for government to support the sector because of its many priorities, hence; the need for a conducive environment to attract more players in the sector.”

He also said the meeting will tackle issues around the Independent Power Producers Framework which, he said, is a powerful tool in the running of daily business for the sector.

“We need to have a framework which will look at the issue of tariffs and protecting the low income majority population, among other things,” he said.

Malawi Energy Regulatory Authority (Mera) board chairperson, Dingiswayo Jere, said Malawi needs a regulatory framework if disbanding of the electricity utility body, Electricity Corporation of Malawi (Escom), is to be concluded soon.

Jere said there is need for Malawi to have a new legal framework which would be more conducive to independent power producers.

“We need a regulatory framework because it encompasses a lot of things. Unbundling of Escom is taking time because the current framework empowers Escom to produce, transmit and sell electricity.

“This meeting is coming at a time when a lot of things are happening in the energy sector. By unbundling Escom, we will be able to add energy to the grid,” he said.

The Consumers Association of Malawi (Cama) is on record as having blamed Mera for continuing to raise electricity tariffs without providing consumers with the Agreed Performance Targets (APT), which form the basis of any tariff increase.

“We find the continued tariff increases unacceptable and unfair in the absence of providing consumers with such performance indicators that are a key to any electricity tariff adjustment,” said Cama executive director John Kapito.

Rera is a formal association of independent electricity regulators whose establishment was approved by Sadc ministers responsible for energy in Maseru, Lesotho, in July 2002.