Minister of Energy Newton Kambala has stopped Electricity Supply Corporation of Malawi (Escom) from relying on hired vehicles, saying it is expensive.
The minister said Escom was spending K250 million per month on 138 hired vehicles, which was not sustainable.
He disclosed this in an interview at Capital Hill on Friday when asked to comment on his tenure of office so far.
Kambala said as soon as he learnt of the arrangement during his early days as minister, he ordered an immediate end to what he described as a “costly deal”.
Based on the minister’s revelations, it means that every year, the power utility company was spending K3 billion on hired vehicles only.
Kambala said the move was not sustainable and did not make business sense.
He said: “Actually, most of the vehicles that Escom was hiring were too old to be used by a company like Escom. There was a population of about 138 vehicles that were hired at a cost of about K250 million a month, which is very huge.
“As someone with a business background, I know that very likely, the decision to use hired vehicles came in because some people wanted to get personal benefits. Immediately I noted that during my first days in office, I instructed Escom to stop hiring all the vehicles and that [arrangement] has stopped as I am talking now.”
Instead, Kambala said his ministry has engaged some commercial banks to offer Escom an asset financing facility which will see the parastatal renew its fleet of vehicles.
Through the facility, the minister said Escom will get the first lot of about 70 to 80 vehicles within a year.
Said the minister: “The amount of money that will be paid to the bank to service such a loan is way below K70 million a month and in four years, these vehicles will look better than hired vehicles and they would become 100 percent owned by Escom.”
Kambala added that he has so far controlled lack of good corporate governance at Escom, saying the parastatal was also losing a lot of money on unexplained fuel and through dubious contracts “but now it’s under control”.
Escom public relations manager Innocent Chitosi yesterday confirmed the discontinuance of hired vehicles, saying the power utility supply company is in the process of acquiring its own fleet.
He said: “It is true that immediately after being appointed, the minister had separate interactions with the [Escom] executive management and the staff union. He was guided us on the direction that the current political administration wants us to take. We immediately off-hired the vehicles and we are in the process of acquiring our own fleet through asset financing.”
Meanwhile, Malawi Institute of Procurement and Supply board chairperson Amos Nyambo yesterday said any procurement process should be one that offers the best value for money.
Commenting on electricity pricing, the minister said he believes that the current Escom avarice tariff of 12.7 cents per kilowatt hour is still high, adding he is aware of many economies that are selling power to consumers at as low five cents per kilowatt hour.
“So, as Minister of Energy, I will fail in my duties if I just increase the generation capacity without looking at how we can reduce the tariff,” added Kambala.
In July this year, Escom was implicated in a scam where some individuals were drawing fuel from the parastatal without rendering any service, a development which caught the attention of the Anti-Corruption Bureau.
The free-for-all allocation of fuel, which dated back to 2018, followed another scandal over a year ago where the power supply company lost to theft 4.2 million litres of diesel for generators and the misprocurement of goods worth K5 billion.