Government quietly rescued Blantyre Water Board (BWB) from a K24 billion electricity debt last year, a behind-the-scenes bailout that helped slash the utility’s annual losses by more than 70 percent.
BWB’s Financial Statements for the year ended March 31 2025 show the Board’s loss narrowed sharply to K10.2 billion from K33.6 billion in FY2024.
Buried in the financial notes is the reason for the improved loss position: a K24 billion settlement of Electricity Supply Corporation of Malawi (Escom) arrears, K19.2 billion of government debt converted to equity, and a special energy tariff that cut power costs by K5.8 billion under the Lazarus Chakwera administration.
The silent intervention comes at a time when BWB, like other water boards, has struggled with cash flow due to high energy costs. Pumping and treating water consumes most of BWB’s budget, and unpaid Escom bills had threatened supply continuity in Blantyre.
The bailout also improved BWB’s liquidity. The current ratio rose to 0.68:1 from 0.40:1 in 2024, giving the utility more room to meet short-term obligations.
The conversion of K19.2 billion of government debt into equity further strengthened the balance sheet and eased gearing.
In the report, BWB also thanks the successful implementation of the Malawi Water and Sanitation Project 1(MWSP-1) for further helping to stabilise the Board’s operations.
Specifically, on equity, government support to BWB more than doubled from 2023 to 2025, with total capital contributions rising to K80.4 billion after a K44.7 billion loan for the Second National Water Development Project was converted to equity in 2023.
An Independent Auditor’s report of BWB finances for the years ending March 2025 by Nexia Graham Carr confirms the transactions, indicating that conversion of loans to equity was in line with the conditions precedent to the financing agreement of the Second National Water Development Project.
“Accordingly, the loans in respect of that amount were deemed not repayable and converted to equity as additional capital contributions in 2023. The Board issued an Investment certificate to the Malawi Government in respect of the K44.694 billion,” it reads.
BWB losses had jumped from K65.2 billion in 2023, to K98.6 billion by April 2024, and to a cumulative K108 billion in losses in the year ending March 31 2025, as per that report.
Economists, and other analysts yesterday frowned at the decision to bail out a commercially viable organisation, , arguing that handling K43.2 billion of public obligations off-budget and without disclosure sets a risky precedent for accountability in parastatals.
Mzuzu University (Mzuni) economic lecturer Chris Mbukwa expressed worry at the bailout trends.
“It has set a bad precedent that is encouraging most parastatals that the government will always come to their rescue, “ he argued. “Repeated rescuing is costly, as it represents crowding out spending in health, education and agriculture due to a parastatal that is not doing its work right.”
He, however, said converting K19.2 billion into equity may have been better than demanding payback BWB could not afford, especially because water is important.
“It’s largely an accounting change, but doesn’t remove the economic cost,” said Mbukwa.
Agness Nyirongo, an economic governance officer at Centre for Social Concern (CfSC), argued that when government assumes liabilities or converts loans owed by a public utility into equity, the financial burden does not simply disappear, it is transferred to the public sector balance sheet.
Said Nyirongo: “If taxpayers are absorbing billions of kwacha in liabilities to keep the utility functioning, there should be clear evidence that the support is producing benefits that can be experienced by the public.
“Otherwise, there is a risk of creating a cycle in which debts accumulate, government intervenes, the immediate crisis disappears and the same structural problems eventually return.”
Bailout secrecy
Scotland-based economist Velli Nyirongo said public financial interventions of this scale should be subjected to robust disclosure and oversight.
The lack of it, he said, “breeds suspicion and can create an environment in which corruption, inefficiency and weak accountability thrive”.
“Government support may sometimes be necessary, but every bailout should come with full disclosure, parliamentary scrutiny, measurable conditions and a credible plan to restore financial sustainability. Otherwise, we are simply socialising the cost of inefficiency and passing the bill to taxpayers.”
Governance pundit Benedicto Kondowe said even where the transactions are legally permissible and appropriately accounted for, K43.2 billion in public financial exposure is material enough to demand proactive transparency.
“Good governance requires disclosure of the rationale, terms, fiscal implications and expected public benefit. What may be lawful in accounting terms should not become invisible in accountability terms.
“Essential public services must be protected, but bailouts should be exceptional, conditional and accompanied by accountability for management and boards where failure is attributable to poor governance,” he argued.
Accountability advocate Willy Kambwandira said those who authorised, processed or implemented these interventions must face rigorous scrutiny.
“Malawians deserve a full accounting of who approved what, under what legal authority, and why Parliament and taxpayers were kept in the dark,” he said.
Is BWB now safe?
While the bailout may have eased the board’s financial burdens, BWB itself acknowledges the fragility of its position in that August 29 statement.
“The Board remains in a loss position and recognises the continued need to implement sustainable cost saving measures, enhance revenue collection efficiency and strengthen governance,” the report reads.
Just on September 1, Escom issued BWB with a disconnection notice, as the utility now required to settle a K1.6 billion electricity bill by September 14, which is just two days away.
In a letter to BWB, Escom chief executive officer Engineer William Kaipa said BWB failed to honour its commitment of settling K2 billion in August, as it only paid K400 million.
Kaipa stressed: “Escom shall disconnect electricity at BWB Head Office on 14th September 2026 if not paid.”
On Thursday, the High Court of Malawi Commercial Division stopped enforcement of an earlier judgment ordering BWB to pay K2.5 billion to a supplier who earlier pushed for payment.
What next?
Consumers Association of Malawi (Cama) chief executive officer John Kapito said BWB needs reforms to improve, not just bailouts, noting that past efforts at reforms have yielded little.
He charged that “this is a body which has become a cash generator for politicians and no wonder top positions are based on political patronage and those close to the top.”
For CfSC’s Agness Nyirongo, BWB needs to strengthen revenue collection, improve billing and metering systems, reduce non-revenue water, control operating costs and improve infrastructure maintenance.
She said BWB should also strengthen financial planning and debt management so it can better anticipate and manage future financial pressures rather than accumulating liabilities until government is forced to intervene.
