Government’s indecisiveness to resolve a wrangle over the rolling out of Power Market Limited (PML) as a single buyer of electricity from generators could scare away investors in the power sector, Parliament’s oversight committee on energy has warned.
Chairperson for Parliamentary Committee on Natural Resources and Welani Chilenga in an interview pointed out that PML is failing to start its functions because of government’s indecisiveness on whether to continue with the new institution or revert to Electricity Supply Commission of Malawi (Escom).
The indecisiveness comes against the background that a solar power firm in Salima is ready to add 60 megawatts of electricity to the national grid but cannot do so with the wrangles rocking the matter.
PML is a creation of the power sector reforms project, a component of the $350.7 million (K242 billion) five-year Millennium Challenge Corporation (MCC) energy compact that aimed at improving power generation, transmission and distribution infrastructure.
So in December 2020 Malawi Energy Regulatory Authority (Mera) granted PML licence under Section 3 of the Electricity Act to buy all electricity from IPPs, including importing and selling this electricity in Malawi.
The new firm is expected to ensure that all market players are duly and timely paid for the services they would have rendered in the power market.
But Escom Staff Union wants authorities to freeze operationalisation of PML which it deems illegal until an independent review of the firm’s viability is done.
The union argues that Escom is currently the sole legal holder of the systems and market operator and single buyer as provided for under section 5 (2) of the Electricity Act whose license is valid for 25 years as provided for under section 12 (1) (e) Electricity Act.
On June 14 2021 the union took the matter to the Ombudsman for its position on the issue. Said the union in a letter signed by its secretary general William Mnyamula: “The Union therefore believes that the actions of the government in creating another company and deprive Escom of single buyer license is unreasonable, illegal and without justification.”
The union also wants the Ombudsman to investigate the recruitment of top management of PML arguing that the process was irregular as no interviews were conducted.
Government committed to undertake the independent review by September 30 2021, according to minutes of a meeting held on March 15 2021 between officials from Ministry of Energy and Escom Staff Union which we have seen.
Weekend Nation understands that the review has not been done. Director of Energy In the Ministry of Energy Cassius Chiwambo in a telephone interview this week confirmed that government has not decided on how to proceed on the matter but will be doing so in the coming few weeks.
Chiwambo explained that government has three options, either to roll out PML, to revert the functions to Escom or let both MPL and Escom to be buying the electricity from IPPs.
“Our decision will be in the best interest of the country as a whole, and not a few interested groups. As government we do respect unions but we cannot allow to be delayed further because of some reservations by other stakeholders. We need to move forward on this matter and government will be announcing its position very soon.”
Chiwambo however did not say why government backtracked on its earlier stand to undertake the review.
But Chilenga said government’s dilly-dallying on crucial issues like this one has the potential to scare away investors in the power sector.
He said currently, a solar plant by JCM Power Corporation in Salima which is expected to feed 60 megawatts into the national power grid is ready for commissioning but the delays are disturbing the launch.
“JCM could not have started its works; it had to take Parliament to guarantee the company that if Escom fails [to pay them] then government will be responsible for payment of bills.”
Reports also show that the JCM wants to construct another solar farm at Golomoti in Dedza which is expected to be producing 20 megawatts.
According to Chilenga, government dream of adding 1000 plus megawatts may not even be attainable any time soon going by the trends.
Malawi Congress of Trade Union, an umbrella body for workers unions in the country is also piling pressure on government to live up to its promise on the issue and implement resolutions as agreed at the meeting with the union members.
In a letter dated September 14 2021 titled Resolutions of the Meeting between Minister of Energy and Escom Staff Union, and addressed to secretary for Energy, which we have seen, MCTU questioned government on its failure to adhere to the resolutions after duly committing to do so.
In an earlier interview Escom’s public relations manager Innocent Chitosi said the country’s unsuppressed demand for electricity is at 360MW.
“On average, we are getting 250MW from Egenco, 20MW from the Chipata-Mchinji Cross-Border Connection and 50 MW from Agrekko,” he said.
Escom has signed a number of Independent Power Purchase Agreements with several IPPs in hydro and solar.
In an interview on Thursday Ombudsman Grace Malera confirmed her office received the complaint from Escom Staff Union and held a meeting this week with the groups’ secretary general of the union William Mnyamula to get more details and seek clarity on some of the issues raised in the complaint.