ESCOM split

 

It is now official. The Electricity Supply Corporation of Malawi (Escom) has been split into two and a new entity solely to be responsible for power generation has been created.

Called Electricity Generation Company (Egenco), the new firm is expected to roll out its operations from early next year, according to authorities.

Ministry of Natural Resources, Energy and Mining spokesperson Ayam Maeresa confirmed the development in an interview yesterday, saying the decision is part of the unbundling process of Escom in line with power sector reforms currently underway.

He said Egenco, which will now take charge of Nkula, Tedzani, Kapichira and other hydro-electric power generation installations, has already been registered and that government expects to finalise all operational preparations by December this year.

The new company will be responsible for power generation
The new company will be responsible for power generation

Said Maeresa: “Basically, Egenco will be generating power while Escom’s sole task will be to supply that power to consumers. The expectation is that by the turn of 2017, this new company should be rolling out.”

He said Egenco and other independent power producers (IPPs) that have already expressed interest to generate electricity in the country will all be selling their power to Escom to feed the national grid.

“But for purposes of regulations, which Mera [Malawi Energy Regulatory Authority] will do, Escom will be the major supplier of power in the country for both domestic and industrial use,” said Maeresa.

The splitting of Escom and creation of Egenco follows the passing of the Electricity Act (Amendment) Bill by Parliament in June this year as part of the Power Sector Reform Project (PSRP), a component of the $350.1 million (about K242 billion) United States of America (USA) Government-funded Millennium Challenge Corporation (MCC) energy compact that seeks to improve generation and distribution infrastructure.

In June this year, Minister of Natural Resources, Energy and Mining Bright Msaka said about 34 companies were set to join the power generation industry in the country.

Maeresa dismissed fears that the unbundling of Escom will result in job losses, arguing the formation of Egenco will also create job opportunities for Malawians.

He said: “We are looking at the establishment of this new company as a breakthrough in the liberalisation of the energy sector and will open up more job opportunities for Malawians.

“Escom employees will remain where they are but if anything the only people who may move to the new company are experts in electricity generation. But in terms of all other departments the new company will have to recruit so that it becomes a standalone company.”

In an interview yesterday, Escom Workers Union secretary general Joseph Kamwendo (not the football player) said the issue of employees’ job security was already discussed with government and they hoped it will live by its assurance that nobody will lose employment due to the unbundling process.

He said: “We have been discussing the issue. Actually, government assured us that nobody will lose their job. But since the unbundling process is still going on, we are monitoring the situation and if there will job losses then we will fight at that particular time.”

On the issue of tariffs, Maeresa explained that any changes in tariffs will not be on account of Escom’s unbundling because of the single buyer arrangement which is being adopted where all independent power producers including Egenco will be selling power to Escom.

Commenting on the development, Centre for Social Concern (CfSC) director Jose Kuppens said there was need for government to ensure that Egenco was indeed performing according to its expectation in order to save Malawians from the persistent blackouts. n

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