The price of running economy on gensets

 

Desperate measures demand desperate solutions. That is the situation Malawi has found itself in as power generation has gone to some of the lowest levels in the country’s history.

From the explanation of Electricity Generation Company (Egenco) chief executive officer William Liabunya, within a week, electricity generation has dropped from 180 megawatts (MW) to 160MW—a 20MW drop. This is in contrast to the installed generation capacity of 351MW and demand of 350MW.

This situation has prompted a drastic load shedding programme from Electricity Supply Corporation of Malawi (Escom) that is seeing some areas having up to 25 hours of no power.

Worsening power outages since 2014 or thereabouts have largely been attributed to low water levels in Lake Malawi and its sole outlet, the Shire River—home to over 90 percent of Egenco’s hydro-electric power plants. To efficiently and adequately generate electricity, Egenco needs 260 cubic metres per second (cumecs) of water passing through the barrage at Liwonde, but is currently having 120 cumecs.

To easily fill the power generation gaps from existing infrastructure, authorities proposed procurement of diesel-powered generators expected to add about 78MW to the national grid. The expectation is that the generators, a quick-fix solution, would fill the gap until other ongoing interventions, including the upgrading of Tedzani III Hydro-Electric Power Station expected to add 11MW by 2018 and upgrading works at Nkula A under the Millennium Challenge Corporation (MCC) energy compact to provide an extra 12MW again by 2018, are finalised.

Besides, there are several other initiatives, including solar panels, Mpatamanga Gorge hydro-electric power project, Fufu hydro-electric power project and the 300MW-capacity Kam’mwamba coal-fired electricity plant.

Fuel-powered generators are an alternative, but do not come cheap. Industries and domestic consumers using such generators are paying through the nose.

On the use of generators at national level, former minister of Energy and Mining Grain Malunga is on record as having told The Nation that generators will likely push the tariffs up if the project was to be sustainable. He gave an example of Kayerekera Uranium Mine which was using 400 litres of diesel per day to produce eight kilowatts. The company was spending about K3 million a day.

Malawi finds itself in this situation of opting for expensive source of energy using generators because of lack of investment in electricity generation infrastructure since the post-single party era developments. There has also been little or no thorough maintenance of the equipment over the years.

The most tangible investment in electricity generation infrastructure in the multiparty era was made by former president the late Bingu wa Mutharika when he directed use of Malawi Rural Electrification Project funds to locally finance Kapichira Hydro-electric Power Plant Phase II that added about 64MW and was commissioned around 2013.

In the prevailing circumstances, Malawians will have to brace for higher electricity tariffs until such a time when long-term interventions being worked on are commissioned from late 2018 and beyond. However, given that in economics prices tend to be sticky going downwards only time will tell whether the tariffs so raised by use of diesel generators will go down.

Unreliable power supply derails economic growth and is a disincentive to attracting foreign direct investment (FDI). Experts estimate that power outages reduce economic growth by between two percent and four percent with education being among the key sectors that are affected.

Access to electricity is one of the key drivers of economic growth and poverty reduction. Sub-Saharan Africa has the world’s lowest access to electricity at an average of 22 percent of the population compared to Latin America with 80 percent and South Asia at 60 percent access. For the record, with 9.8 percent access rate, Malawi is at the low end in the Sub-Saharan Africa region.

Malawians have had enough of unreliable power supply in recent years, a development that has also negatively impacted on the business climate. We have heard about most of the projects being highlighted now for over a decade. It is action and political will that is needed to make them real. n

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