Power purchase disagreements stall 100MW power project

Disagreements over power purchase agreement (PPA) between an Independent Power Producer (IPP) and Electricity Supply Corporation of Malawi (Escom) has stalled plans to establish a 100 megawatts (MW) kinetic energy project.

This is despite the convener of the project worth 240 million euros (about K270  billion), Mkaka Construction Company, signing a memorandum of understanding (MoU) with Ministry of Natural Resources, Energy and Mining for the project to take off.

According to the convener of the project, the financier was put off by conditions set by Escom in the PPA such as not providing electricity 24/7, a development that could have ensured that they make a return on investments after 10 years with prices maintained below the current average of K57.72 per kilowatt per hour (kWh).

While the ministry acknowledges the existence of the MoU with Mkaka Construction, Escom on the other hand says it is not aware of the issue despite being engaged on the project.

The country is reeling from extended load-shedding that lasts more than 24 hours due to power supply deficit as a result of low water levels in Lake Malawi, which feeds into Shire River, the main source of hydro power generation.

Escom public relations manager Kitty Chingota said Escom is not aware of the issue, “but when it is forwarded to Escom, we will deal with it accordingly”.

In an interview, Mkaka Construction Company managing director Newton Kambala said the project, which could have rolled out two and a half years ago, could have created over 300 jobs and minimised blackouts.

He said: “If it works, we could have been leasing not less than 50MW into Escom grid and the blackouts would not have been here. The problem is that many people in Malawi are risk averse.”

Kambala said the type of technology they proposed, would have enabled them to charge customers less than what Escom is charging.

Ministry of Natural Resources, Energy and Mining spokesperson Saidi Banda said the ministry signed an MoU with Mkaka Construction, but the PPA is negotiated by Escom.

“This being the case, Escom would be in a better place to discuss issues related to PPA because the ministry cannot buy electricity but only facilitates investments,” he said. n