Inside halted power deal

Electricity Supply Corporation of Malawi (Escom) pushed for a waiver to negotiate a deal with an independent power producer (IPP) despite Attorney General (AG) Thabo Chakaka Nyirenda’s temporary suspension of all unsolicited power deals, it has emerged.

Escom’s push, according to our source, prompted the Anti-Corruption Bureau (ACB) to issue a restriction notice to Escom chief executive officer Kamkwamba Kumwenda two weeks ago stopping any dealing with Westland Energy Power, which formed a consortium with Africa Consolidated Services Group (ACSG), to pave the way for investigations.

In a letter dated July 7 2023, Nyirenda informed Escom that he had temporarily halted the signing of unsolicited IPP deals until a review of some contentious clauses in the power purchase agreements (PPAs). The review is scheduled to conclude in October.

Correspondence The Nation has seen and interviews with responsible officers show that Escom did not want to wait for the review process purportedly because Westland was providing unique technology.

In an interview last week, Nyirenda, who wondered how The Nation got hold of the correspondence, confirmed receiving a request for a waiver, but stressed that his review process was in good faith and should be allowed to take place as it may help government save money.

He said there are some clauses in PPAs that need to be looked into carefully before signing as these put government at risk of losing money.

Said Nyirenda: “There are issues of sovereign guarantees and obligation placed on government to source foreign currency for IPPs… These are investors who must not place financial burden on government.

“There are cases where government is expected to pay there be termination of contract. I am doing this in good faith. I am not blocking anything. It is my office expected to defend these should something happen. So, it helps to minimise risks.”

A week after the AG’s instruction for temporary suspension, Escom wrote Minister of Energy Ibrahim Matola seeking approval to allow Westland Energy Power to proceed to full feasibility study and negotiation on a PPA.

Reads the letter in part: “I would like to request for your approval, sir, to allow the Electricity Supply Corporation of Malawi Limited to proceed to power purchase agreement negotiations stage with Westland Energy Power on the understanding that the IPP is providing unique technology which cannot be subject to open tendering which is a requirement for standard and matured technology such as solar PV.”

The letter further stated that Westland had developed a prototype able to generate 40 kilowatt (kw) which has not been deployed elsewhere and that it offered to provide 300 megawatts (MW) capacity to Malawi.

The letter has the name of the Escom CEO, but was signed on his behalf.

In another letter dated August 1 2023, Secretary for Energy Alfonso Chikuni wrote the AG to inform him of the request from Escom to the minister. This letter suggested that in case he granted a waiver, contested clauses needed to be carefully examined.

Reads the letter: “I understand that your decision to halt the PPAs was influenced by concerns regarding the drafting of the agreements. Therefore, if the waiver is granted, I kindly request your office to carefully examine the crucial clauses.”

Chikuni confirmed writing the letter and that he was only communicating to the AG based on Escom’s request for approval from the minister.

He said: “Considering the minister’s desire for the Attorney General to grant approval before proceeding issuing approval to Escom as a single buyer, I deployed a letter to the AG accordingly.

“However, since the AG had previously expressed concerns regarding the form and type of the PPA, I made sure to emphasise in my letter that the waiver should not overlook these raised issues.”

In an earlier written response, Kumwenda said it was actually Escom which requested for AG’s assistance to review the PPAs because they wanted to follow procedure.

On why Escom was seeking a waiver to deal with Westland Energy before the AG’s office concluded the review, he said he could not remember such a request.

Said Kumwenda: “This letter originated from the ministry. I am yet to get details of our communication to ministry ministry. Let me check if there was such communication since I was on leave during the period the letter was sent.”

But when The Nation presented details of their correspondence, he suggested that it was government that wanted them to proceed with this deal despite the AG’s stop order.

Kumwenda said Westland was also invited to the Office of the President and Cabinet (OPC) for a multi-sectoral meeting where the interest weighed more on energy and fertiliser manufacturing.

He said: “The government wanted us to proceed with the project, but there are legal issues to be addressed. We, therefore, sought the minister’s approval since he must approve such.”

Matola declined to comment on the matter, but we have seen his communication to Chikuni, asking him to call for a meeting on this matter.

Kumwenda indicated Escom has since complied with the ACB order.

The IPP Framework (2017) allows both solicited and unsolicited IPPs, but provides guidelines on how to deal with each of these.

ACB issued a restriction notice two weeks ago. The restriction has a validity of 90 days.

The Nation established that Westland is domiciled in the United States while ACSG’s physical address is 8 Lake Chad Crescent, Maitama in Abuja, Nigeria.