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Private finance key in power sector—study

The World Bank has called on Malawi Government to pursue private financing to achieve reliable, sustainable and modern power by 2030.

This is contained in a  study the Bretton Woods institution conducted to find out how to invite private interest in power sector investments in the sub-Saharan Africa region.

About 51 private investors and financiers were surveyed and ranked Malawi among countries ready for private investment.

Malawi’s electricity has been unreliable for years due to insufficient supply

The study noted that on average, investors’ and financiers’ experiences in the power sector in sub-Saharan Africa, including Malawi, have been positive, with 42 percent of respondents expressing positive experiences and 15 percent reporting negative experiences.

Reads the study in part: “Despite many challenges, experiences with power sector investments in sub-Saharan Africa have been more positive than negative where many respondents planned to invest in the region in the next three years.”

The study says investors and financiers assign more importance to policy and regulation risks than to risks related to wider power sector context.

It, however, observes that Malawi has substantial power sector reforms from which the most cost-effective portfolio can be developed.

The study is coming at a time Malawi is struggling to produce adequate power, with only 10 percent of the country’s 18 million people having access to electricity, according to the Malawi Sustainable Energy Investments Report.

Water flow in the Shire River, which is Egenco’s main source of hydro power generation currently allows it to produce up to 200 megawatts (MW) or less against a maximum generation capacity of 351.75 MW, which is topped up by diesel-powered plants installed in the country’s three major cities.

The Malawi Government has, however, committed to diversifying electricity generation sources to increase available power for people and industries by engaging private sector in its endeavour to improve the situation. 

Currently, the Malawi Government, through the Public Private Partnership Commission (PPPC), is looking for a strategic investor for the proposed $1 billion (about K740 billion) 350MW Mpatamanga Hydro-Power Project scheduled to commence in five months.

At the launch of the procurement of a strategic sponsor of the project last year, PPPC acting chief executive officer Audrey Mwala said that at the initial marketing phase, five international firms had shown interest to invest in the project. Meanwhile, Electricity Generation Company of Malawi (Egenco) has stated in its 15-year strategic plan that it seeks to bridge the divide between its installed capacity of 367.3MW and the present project demand of 529MW using a mix of power sources.

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