The Malawi business community has welcomed the signing of an electricity supply agreement between Malawi and Mozambique, saying it will make a big difference to industry and the country at large.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) Matthews Chikankheni said on Sunday while he did not have details on the deal, the development is welcome and of particular interest to the private sector because the country has been facing a lot of problems with electricity.
Said Chikankheni: “Malawi does not have enough generating capacity locally. Any means to address the current shortage is supposed to be supported. The gap between supply and demand is so big and we need to take measures to reduce this gap.â€
President Joyce Banda and her Mozambican counterpart Armando Guebuza signed the energy deal over the weekend to supply electricity to Malawi through Cahora Bassa Hydroelectric Dam on the Zambezi River in Mozambique.
French news agency, Agence France-Presse (AFP), reported on Saturday that Banda and Guebuza signed the agreement in the Mozambican capital, Maputo, during Bandaâ€™s three-day State visit in a first step to restore troubled relations between the two neighbours.
AFP quoted Malawiâ€™s Foreign Affairs and International Cooperation Minister Ephraim Mganda Chiume as having said:Â “In Malawi, we are short of power. This is having a negative impact on industry. Things have stalled, but we hope we can have this project up and running soon. We are desperate for power.
“In Malawi, with our new President, we are trying to open a new chapter. We want to ensure the bonds of friendship are enhanced and misunderstandings unblocked.”
Unreliable power supply has consistently featured among the list of factors contributing to a poor business climate in Malawi, according to MCCCI and World Bank â€˜doing businessâ€™ reports. In 2009, Malawi, with about eight percent of the population having access to electricity, recorded 63 days of power outages, which was described as the worst reliability record of the 24 sub-Saharan African countries.
Electricity demand in Malawi is estimated at 344 mega watts (MW), but the current installed electricity capacity is 282.5 MW.
Erratic power supply is believed to cost the country approximately $215 million (about K53.7 billion) a year and deters new investment.
First proposed in 2007, the power interconnection project stalled because former president the late Bingu wa Mutharika argued that it was costly.
But Bandaâ€”who was sworn in as President on April 7 2012 in line with constitutional order after Mutharikaâ€™s death on April 5 2012â€”and Guebuza signed the memorandum of understanding (MoU) during her visit to heal relations that broke down under Mutharika.
The Malawi-Mozambique Power Interconnection Project has been full of political drama, with Mutharika assenting to the Transmission Interconnection Project Authorisation Bill in 2007 on a World Bank loan without parliamentary approval.
When the bill was finally tabled in Parliament in 2009, the House rejected it and unanimously agreed to refer it to the Budget and Finance Committee for further scrutiny.
Most MPs from both sides of the House supported the project, but said they were worried about hidden costs of the agreement with Mozambique including a requirement for Malawi to pay about $480 000 (about K69.6 million at the then exchange rate) per month.
Delays in passing the bill raised fears that Malawi would likely miss its $48 million share funding from the World Bank which gave Malawi up to December 31 2009 to make a decision on the project.
Relations between the two countries deteriorated in October 2010 when the Mozambican authorities detained a Malawian boat that was trying, “without authorisation”, to navigate the Shire River to prove its navigability.
Since ascending to the presidency to complete Mutharikaâ€™s term of office, Banda has gone to great lengths to rebuild relationships that collapsed under his rule.
Built in 1974, Cahora Bassa only began turning a profit in 2010, three years after the building of a line to South Africa, which buys 65 percent of the damâ€™s output.