PML entry to de-risk power market sector

Power Market Limited (PML) says the coming on the market of the firm as a single buyer will reduce the country’s risk premium and attract more players in the power sector.

Speaking in Mangochi on Friday during a media orientation workshop, PML chief executive officer Rosemary Mkandawire said the firm has come on the market to create trust for power sector investors.

“We need to de-risk the power sector so that we can achieve the much-needed investment,” she said.

PML, which is an independent entity performs the single buyer function within electricity supply chain, came on the market as part of reforms in the power sector. It rolled out its function in January 2020.

Mkandawire said the firm’s aim is to woo investors to build power plants, stressing that their desire is not to take jobs from Electricity Supply Corporation of Malawi (Escom) and Electricity Generation Company (Egenco).

“PML has not added any cost to the end user tariff,” she said.

Mkandawire said PML, which has a 25-year licence, will not be there forever, adding that it is just a transition to ensure that the country has sufficient power.

She said it is important to maintain the single buyer function for the sake of accountability of money realised from the sale of electricity.

Mkandawire said single buyer function has also excited independent power producers as they envisage fairness in the operations.

PML director of marketing and corporate services Villant Jana said a number of things will improve in the power sector if the single buyer function is fully operationalised.

She said the single buyer function will, among others, ensure accountability of the money collected from customers, offer comfort to investors in terms of transparency, fairness and reliability of the rules of engagement in the power sector.

Said Jana: “It will enhance predictability of the existing regulatory framework and help to manage the challenge of arms-length trading between market participants.

“PML is a clean slate with no debt burden. This together with guaranteed payment will eventually result in reduction or risk for investors in the power sector.”

She said having multiple licences in Escom has proved to be a burden for the utility, making other licence operations such as the single buyer to suffer.

Ministry of Information director of information Chikumbutso Mtumodzi, who officially opened the workshop, said the Malawi 2063, the country’s long-term development plan, envisages a strong and competitive manufacturing sector which needs reliable power.

“Reliable power supply is the driving force for any economy,” he said. 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, a United States agency.