Small-scale firms feel pinch of electricity hike

Small-scale businesses are bearing the brunt of a 20 percent electricity tariff hike effected by Electricity Supply Corporation of Malawi (Escom) on October 1 this year .

In random interviews last week, the small-scale businesses said apart from being affected by intermittent power supply,  electricity tariff hike is eating into their working capital.

A welder in Ndirande Township in Blantyre, Raphael Malekano, said the tariff hike has affected his daily income because he now spends more money to buy electricity units which do not last long.

“It is a tough life for businesspeople like me who depend on daily cash from the business. Currently, we are already struggling with blackouts and with the tariff hike, things are just getting worse for us.

“In the past, I used to buy electricity units worth K1 000 and they could last a week or so,but now with the same amount, we are using it only for three days,” he said.

A barber shop owner in the same township, Gift Mapira, expressed the same sentiments, saying the new tariff has brought misery in their lives.

“In small businesses such as this one, our earnings are low and the increase in tariff is hurting us quite a lot. The electricity that we use and the profits we get from our meagre income are totally different.

“We are spending more money in buying electricity units and it is a drawback to our business,” he said.

In an interview, Consumers Association of Malawi (Cama) executive director John Kapito said small-scale businesses are facing a tough time as a result of the new tariffs.

“It is indeed a painful situation to the small business. If we look at both sides, it is hard not to have electricity due to blackouts and high tariffs. We should just get used to the situation because the tariffs will not go down anytime soon.

“We should expect another hike next year which means that the consumers will continue struggling,” he said.

Kapito advised consumers to monitor Escom’s performance to ensure that the money it is generating is used towards the construction of infrastructure that they promised.

In September, Malawi Energy Regulatory Authority (Mera) approved a 31.8 percent electricity tariff hike for Escom to be implemented over a four-year period, with 20 percent effected on October 1.

When approving electricity tariffs, Mera board chairperson Reverend Joseph Bvumbwe said the 31.8 percent adjustment in electricity would translate to an average tariff of about K95.15 per kilowatt per hour (kWh) against K117.64 /kWh which Escom requested, representing a 60 percent increase, but was rejected.