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MCA commissions study on power grid compensations

The Millennium Challenge Account (MCA) Malawi office will engage an expert consultant to undertake a study on the form of compensation packages to be given to various people displaced or affected by a United States’ government-supported energy sector expansion project.

The US through the Millennium Challenge Corporation (MCC) is implementing a $350 million energy compact with Malawi aimed at improving and revitalising Malawi’s energy sector.

Banda: We will seek a professional and accountable compensation process
Banda: We will seek a professional and accountable compensation process

Speaking in Lilongwe MCA-Malawi chief executive officer Suzan Banda said the compact which has concluded first year of implementation, will seek a professional and accountable compensation process for those affected across the country through construction of new power lines.

“We understand there has been a lot of interest in the issue of compensation and we expect the consultant to conduct a study on what will be the levels of compensation based on a World Bank formula,” said Banda.

Additionally, Banda revealed that the MCC will also conduct another study on whether the country’s energy monopoly by sole-electricity structure by the state-owned Electricity Supply Commission of Malawi (Escom) was efficient and whether the country should liberalise the sector.

She said the compact was, however, already favorable to the promotion of alternative sources of energy, emphasising that the project’s overall goal was ensuring sustainable energy to reduce poverty through economic growth.

“Escom is currently a monopoly but we are helping government understand what structures to be put in place to encourage more players to come up in the power generation sector. We are looking into whether the current structure is the best for the country,” added Banda.

She said MCC was currently undertaking another study on ensuring Escom was financially efficient including on energy tariffs.

MCA resettlement officer Edith Maseya said the consultancy on resettlement and compensation will focus on coming up with a human and environmental inventory on areas in the northern, central and southern parts of the country where the new power lines will pass through.

She said an independent financial institution will be engaged to facilitate the payments of the compensation after a dialogue process with communities on the nature of compensation to be used.

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