APM’s industrialisation challenge

President Peter Mutharika regularly talks about industrialising Malawi. But how does he plan to achieve that without serious investment in the energy sector that is supposed to power the industrial transformation?

When you look at the budget allocations to the energy sector you would laugh your lungs out.

Government allocation to the energy and mining sector is below two percent of the national budget—imagine that!

What can these meagre investments do other than just paying technocrats their wages and salaries as well as allowances for drafting documents that have no hope of being implemented?

The Economics Association of Malawi (Ecama) this week described government spending in the energy sector in the past consecutive national budgets as “too little” and “insignificant” and perpetuates energy supply shortages in the country.

According to an analysis by Ecama released during the first pre-budget consultation in Lilongwe on Tuesday, government budget allocation as a percentage of gross domestic product (GDP) remained below one percent between 2016/17 and 2018/19 national budgets.

More worrying is that the financial allocations to the sector are set to remain low at an average of one percent per annum through 2030.

No wonder, while suppressed demand for electricity still hovers around 350 megawatts (MW), supply sometimes drops to as low as 170 MW.

But even this suppressed depend is set to jump to 1 600 MW in 2030. That means demand—no matter how suppressed it might be—will far outstrip supply, leaving little pathways to the so-called industrialisation drive due to the erratic availability of electricity at both household and firm level.

Because of the unreliability of power supply in the country, experts estimate that Malawi loses about $16 million (nearly K15 billion) annually  owing to power outages as lack of political will and short-termism in approaching the energy crisis worsens the situation.

Yes, there have been some investments from development partners such as the United States’ Millennium Challenge Account (MCA) that has helped to boost transmission and distribution infrastructure.

Government has also tried to bring in reforms that are attracting private investors into the sector, especially in the area of renewable energy, but the pace is too slow to achieve the ambitious objectives of the country’s Energy Policy, which are:

lTo improve efficiency and effectiveness of commercial energy supply industries;

lTo improve the security and reliability of energy supply systems;

lTo increase access to affordable and modern energy services;

lTo stimulate economic development and rural transformation for poverty reduction;

lTo improve energy sector governance;

lTo mitigate environmental, safety and health impacts of energy production and utilisation.

But with such a sleeping energy sector, we can as well forget about having a sector that is robust and efficient enough to support government’s agenda of poverty reduction, sustainable economic development and industrialisation.

We will have a long wait to have a liberalized, private sector-driven energy supply industry and can kiss good bye the dream of transforming the country’s energy economy from one that is overly dependent on biomass to one with a high modern energy mix. What is needed is an aggressive approach to the energy problem.

That means even as we look at renewable energy options as a more sustainable way of producing electricity, we should not lose sight of sites that have high potential for hydro-electricity, which remains the biggest source of electricity in Malawi.

I have in mind Manolo (60 to 130 MW), Henga Valley (20 to 40 MW), Rumphi (3 to 13 MW), Chizuma (25 to 50 MW), Chasombo (25 to 50 MW), Malenga (30 to 60 MW), Mbongozi (25 to 50 MW), Kholombizo (140 to 280 MW), Mpatamanga (135 to 300 MW), Lower Fufu (75 to 140 MW) among several sites with potential. Wasting too many years to feasibility studies that never produce results is the reason the country is so energy insecure.

A project in Mulanje has just shown that these mini-hydro power stations can make a difference.

I believe that even making commitments of two mini-hydro plants every two years could gradually improve the situation over time.

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