United States of America (US) Ambassador Virginia Palmer has called for swift action and prosecution of those involved in the theft of 4.2 million litres of diesel for generators and misprocurement of goods worth K5 billion at Electricity Supply Corporation of Malawi (Escom).
She was speaking in an interview on the sidelines of a cocktail event for US exchange programmes alumni in Lilongwe on Tuesday.
Treasury has denied Escom a K55 billion bailout, forcing the power utility company to turn to commercial banks to borrow K30 billion, with K25 billion expected to be sourced once a new four-year cost reflective tariff regime is approved.
But Palmer, whose government’s $350.8 million (about K257.8 billion) investment in the power sector included reforms to allow more players, bemoaned that there was still work to be done to attract and maintain investors.
She said problems of misprocurement, corruption and mismanagement needed to be dealt with swiftly.
Said Palmer: “They’ve bought things they don’t need to buy, there are stories of theft of fuel and that is very wrong and very upsetting. I hope that they will take very swift and stern action, people will get fired and people will be brought to justice.”
The envoy observed that a good financial standing of Escom was crucial to convincing private sector companies to invest in new power generation plants in Malawi.
Apart from investments in hydro-generation, the government is looking for and has identified investors in solar generation and signed an interconnector agreement with Zambia for 20 megawatts (MW).
“In order to keep them [investors] interested, they have to be confident that the electricity company can afford to buy the electricity. But if Escom doesn’t have the money to buy that power, the investments that the US government have built into transmission and that we have built into the connector will not be worthwhile,” Palmer said.
She emphasised: “We need to tackle both things: You need a cost reflective tariff and you need real action to ensure that the Escom board is not approving bad deals and making sure that people who are misbehaving, who are cheating and stealing from the people of Malawi are punished.”
Since revelations of fuel theft were made last month, then pegged at 3.8 million litres, only one driver, three security guards and a stores clerk in Lilongwe have been arrested and are currently on bail.
Escom says it is still investigating how the fuel could have been stolen between the point of loading at National Oil Company of Malawi (Nocma) and the generators at the three sites of Chichiri, Kanengo and Chinyama in Kasungu.
A report of the 4.2 million litres theft compiled by the Escom head of security indicates that the company suspects collusion between drivers, fuel attendants, guards and Aggreko staff.
Escom chief executive officer Allexon Chiwaya says action will be taken once investigations have been completed on the matter.
Escom has since acknowledged the misprocurement which it attributed to poor planning and lack of scrutiny of its procurement plans by external stakeholders such as the Directorate of Public Procurement and Disposal of Assets.