Parley speaks on Escom unbundling
Parliamentary Committee on Natural Resources and Climate Change says leaving Electricity Supply Corporation of Malawi (Escom) in charge of the single buyer function has the potential to scare away investors in the power sector.
The sentiments were made on Saturday when the committee met Escom board members and management in Salima to discuss single buyer functions that Escom pleads to retain.
The commettee’s chairperson Werani Chilenga said the creation of Power Market Limited (PML) as a single buyer was in the best interest of developing the sector to allow more independent power producers (IPPs) to participate in the energy sector.
He said: “Their argument is not holding because Escom was looted and is now in tatters therefore taking the single buyer function back to Escom will scare investors. PML was issued single buyer license in March, so it is very important that our laws are followed to the letter.
“Our energy laws do not allow a company to own more than one licence so they cannot maintain the single buyer licence to buy power and sell to themselves.”
Chilenga said PML should be given a chance to roll out its single buyer function and once it will be found incompetent, the Malawi Energy Regulatory Authority (Mera) which issued the single buyer license will have to revoke it.
Escom board chairperson Frederick Changaya pleaded with the committee to ensure the parastatal sustains the single buyer function to provide seamless power supply and transmission that meets the population’s expectations.
He said stripping it of the single buyer function will paralyse its service delivery as the standard acceptable practice globally is that public institutions like Escom are unbundled when their services cover 90 percent of the population.
Said Changaya: “Little revenue source remains because now every K46 is paid to Egenco where Escom could have a profit, to make matters worse, Escom was depleted or looted previously, so where will Escom get funds to fulfil its mandate issued in the licence.
“We are saying the reasons behind failures of Escom were exogenous, they came from external forces from the political powers during previous regime, so as a new board, we argue that, it is not the right time to have a go at it again, that’s not a very big request that we are asking because we know we can do it”.
He said it is cost effective to sustain the single buyer function within Escom than creating a standalone public company where taxpayers will be burdened to pay a fully-fledged management, its operations and a board.
According to Changaya, the transfer of single buyer functions are currently under arbitration because the ministries of finance and Energy stopped the transferring of the Single Buyer function to PML after understanding that Escom with mere power supply function will be dead because of the decision.
PML chief executive officer Rosemary Mkandawire last week called on Escom to ensure that the matter of transferring the account is properly done so that the country benefits from the operations in the energy sector.
She said operations of PML are currently suffering because management of the account has not been moved to them.
Mera chief executive officer Henry Kachaje said they currently recognise, PML as the institution handling the single buyer system hence called on Escom to only handle what is within its mandate.
Last year, during a meeting between the committee, Ministry of Justice, Escom, PML, Mera and other stakeholders, the Office of the Attorney General advised that the single buyer system should be transferred from Escom to PML by December 31 2021.
The formation of PML followed reforms which started in 2003 and came to fruition in 2015 with support from the $350.7 million (K289 billion) energy compact by the Millennium Challenge Corporation.
