The Consumer Association of Malawi (Cama) and the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) overwhelmingly rejected a 58 percent electricity tariff hike the Electricity Supply Corporation of Malawi (Escom) proposed for the 2014-2017 period, arguing that the amount is unreasonable.
The Malawi Energy Regulatory Authority (Mera) received an application for Electricity Base Tariff Review in accordance with Section 16 (5) of the Electricity Act for approval. Escom proposed the tariff increase to achieve its objective of improving power supply.
Mera is conducting public hearings to enable service providers, policy makers, utility customers, investors and other stakeholders in the energy sector to give their views on the proposal.
Speaking at the second hearing of the review meeting on Tuesday in Malawi’s northern city of Mzuzu, Cama executive director John Kapito said Escom made the same promises to improve supply in the just-ending period, but failed “miserably” to achieve its objectives.
“It does not make sense that Escom should raise their tariffs that much. There are things that Escom needs to do to cut costs to meet its objectives. For instance, Escom needs to reduce its workforce and luxuries.
“In Malawi, it takes 17 people to produce one megawatt of power while in Zambia it takes five people to do the same and recently, we heard that Escom gave away K35 million [$87 500] and has bought cars worth K1.4 billion [$3,5m] and no one expects this from a company that is complaining about not having money,” said Kapito.
He also said the corporation has not explained clearly how it is going to reduce expenditure to improve power supply, arguing that the reasonable tariff increase should have been 20 percent or less.
MCCCI board chief executive officer Chancellor Kaferapanjira said the proposed amount is “unreasonable.”
“We all know that Escom is inefficient and there is no way industries will be paying for their insufficiencies with the proposed amount. I think 25 percent or less would be acceptable.”
Escom’s Everson Mandalasi justified the electricity hike, saying there is need for increasing access to electricity in the country because Malawi is the least electrified country in the Southern Africa Development Community (Sadc) region.
“The hike is meant to assist in the rehabilitation of our generation plants and purchase more equipment to increase accessibility to electricity because only nine percent of the population has access to electricity,” he said.