The Millennium Challenge Corporation (MCC) and Malawi Government on Friday exchanged letters signifying the official commencement of the five- year compact agreement.
The total compact budget amounts to $350.7 million (about K126.3 billion) as a grant programme focusing on revitalising Malawi’s energy sector.
United States (US) Ambassador Jeanine Jackson said yesterday during the exchange of letters with the Malawi Government in Lilongwe government may now begin to access the full $350.7 million compact budget.
She said the official entry into force, would among others, entail funding for a ‘turnaround’ facility to meet gaps in Electricity Supply Corporation of Malawi (Escom’s) working and investment capital needs, the sharing of a construction schedule for Kapichira 2, Malawi Government commitment to a fully cost reflective tariff, the identification of benchmarks against which the government can monitor progress on its power sector reform agenda.
She described the project, which was suspended during former president the late Bingu wa Mutharika regime, as ambitious as part of its investments would include the construction of a 400 Kv transmission line from Blantyre to Lilongwe, the rehabilitation of the Nkula A hydropower plant, the development of approximately 25 substations.
The US ambassador also explained that part of the funding would be directed towards the acquisition of harvesters and dredgers to help reduce costly disruptions in hydropower generation due to excessive weeds and sedimentation in the Shire River.
Minister of Finance Ken Lipenga said by exchanging the letters with the US Government, Malawi has demonstrated its commitment to ensuring that the compact is completed on time.
Lipenga said since the reinstatement of the compact in June 2012, government has moved swiftly and ensured that set conditions are met to avoid any further delays in the commencement of the project and its implementation.
MCA-Malawi chief executive officer Susan Banda said the overall objective of the project is to reduce poverty through economic growth in Malawi.
The US energy grant is the largest that Malawi has received for the energy sector since the commissioning of Nkula A in 1966.