Egenco track, needs support
Electricity Generation Company (Egenco) recently emerged as the star performer among parastatals in Malawi. Minister of Finance and Economic Planning applauded the tremendous progress and exemplary nature in the way Egenco is performing. Management of Egenco needs to be applauded and supported for delivering on its promises amidst a plethora of challenges. This level of performance also comes at a time when a whole host of parastatals continue to be loss making and scrambling for bail outs from treasury.
However, the state of interplay involving Electricity Supply Corporation of Malawi (Escom), can potentially lead to a decline in morale and performance at Egenco. Sadly, government appears keen to protect the loss making and underperforming entities, and shielding their inefficiencies. The state of political interventions and careless political statements can also turn Egenco into an institution that produces frustrations instead of producing power.
Recently, Egenco has suffered unwarranted attacks, criticism and financial injustice. In a strange and mindboggling outburst, President Chakwera lambasted Egenco at a public event in Blantyre for what the President called inefficiencies on the part of Egenco. Surprisingly, this was at a time when Egenco had just managed to reinstall the heavily damaged power generation plant at Kapichira after that most devastating Cyclone Freddy. To date, Malawi continues to enjoy more stable supply of electricity.
Load-shedding and power blackouts have significantly been reduced and completely eradicated in many areas. These improvements can be directly attributed to the diligence of Egenco and to the hardworking team of technicians and engineers who toil day and night to support the Malawi economy with uninterrupted power supply.
Lately, Egenco has suffered a financial injustice where Government has cancelled a debt owed by Escom. The cancellation of K65.9 billion debt has negative implications on the financial capacity of Egenco, and it makes a mockery of the energy sector reforms. Government is playing the hypocrisy card by backtracking on key actions that are part and parcel of the energy reforms package. The reversal gear on these reforms was clearly signaled the moment Government dissolved Power Market Limited (PML). It appears that Government is not interested to keep Egenco too.
The cancellation of Escom debt is a strange and suspicious debt cancellation move that may structurally weaken Egenco. It is absurd to strengthen the power distribution entity yet weakening the power producer. The argument that Egenco is operating machines that were already paid for is the most illogical thought. Egenco needs money to service the machines and respond to emergencies in real time.
By taking away funds from Egenco, government is almost sending a bad signal that Malawi can do without its own power producer. Government is indirectly supporting independent power producers some of which charge exorbitant prices sometimes three times higher than Egenco, and are being paid in United States dollars at a time Malawi is struggling with forex. Giving too much autonomy to independent power producers is also a security risk because power is central to strategic interests such as national security. Similarly, government needs to be cautious with the Malawi-Mozambique power interconnection which may be more expensive in terms of tariffs to be paid in US dollars. Malawi is already struggling to fund forex for buying fuel, making it even harder to pay for electricity imports.
Government needs to support Egenco instead of frustrating its operations. Egenco management needs to be appualded for putting the institution on track. The entity is central to Malawi’s economic growth. Egenco is a key player in implementation of energy sector reforms and achievement of Malawi2063. Government should stop the tendency to support inefficient parastatals that are only used as political cash cows, and are a drain on scarce tax and forex resources.
