Escom’s proposed 50% tariffs sickening
very year Escom increases its tariff, but it has little to show for money it raises. Blackouts that started during Bakili Muluzi days are still the order of the day, billing system is in disarray as figures on the metre and the bill do not match and sometimes bills are inflated.
Not only that. It takes ages to be connected to the electricity grid even when a pole is a few metres away from your premises. Walking at night in townships and suburbs is dangerous as streets have no lights even 49 years after independence.
All this leaves one flabbergasted as to whether the organisation has effective managers or quality control. To put it succinctly, Escom is a failed organisation technically and administratively.
The proposal to increase the tariff by 58 percent has been met with stiff resistance, justifiably so, from civil rights groups and ordinary Malawians.
While it is understandable that Escom needs financial resources to expand its capacity and improve efficiency, it should look for alternative ways of raising funds rather than overburdening the already struggling households. Being a State-owned enterprise, Escom can secure a loan which government can guarantee. Escom is a government baby that should be bailed out when it is in trouble.
More importantly, Escom management need to do an introspection and focus on areas it can cut unnecessary expenditure. It should abandon its lavish lifestyle. A few months ago, Escom bought expensive 4 x 4 vehicles at a total cost of K1.4 billion when they fail to improve services. These vehicles will be sold to managers at unreasonable prices a few years from now.
But think of it, why should all mangers have company vehicles? It is not sustainable?
As Consumer Association of Malawi (Cama) boss Kapito has rightly observed, Escom should reduce “unnecessary costs” instead of making innocent consumers pay for its wastefulness.
Equally, Escom should refrain from donating huge sums of money to charitable organisations under the guise of corporate social responsibility when it is miserably failing to satisfy its consumers.
What is the motive of donating millions of kwacha to charity when streets are dark and consumers wait for ages for electricity installation? Donations should be reasonable.
Escom can also boost its coffers by improving its debt collection. There are a lot of organisations that owe Escom millions in unpaid bills. They should employ debt collectors to ensure all the money is collected.
It is high time government extended austerity measures to State-owned companies such as Escom. Many of these parastatals operate as if they are owned by an individual or a few individuals because government is not providing proper direction. Equally, boards of these parastatals are not effective enough to provide strategic direction to management, curb wasteful spending and improve efficiency.
The work of Malawi Energy Regulatory Authority (Mera) in tariff hike is important. As a regulator, Mera is mandated under Part III, Section 17 of the Electricity Act to conduct public hearing (to seek the views of the members of the public) before a tariff can be revised. In the past, Mera was ignoring this important legal requirement and was reduced to a rubberstamp body for Escom’ s tariff hikes. Mera was approving these tariffs without public hearing. This was against the law and negligent of duty. Mera has to balance between the legitimate rights of the consumers not be exploited and the desire of Escom to make more profits.
The 58 percent hike is redundant and will have ripple effect. It will increase operating costs as businesses will pay more for electricity. This will force them to hike prices of essential goods which will in turn drive the inflation up. It is inconceivable that a State-owned entity like Escom can propose a 58 percent tariff increase even under harsh economic conditions people are living in. This is not only insensitive, but exhibits a spirit of ‘we do not care’ attitude.
To allow Escom to increase the tariff by 58 percent is not only unreasonable, but a recipe for political and economic instability. Government has little choice, but to guarantee a loan for Escom.n
The author is a university lecturer and former executive director of Media Institute of Southern Africa (Namisa)
ESCOM & concerned mgt,wld U plz take up the issues surfac ed in the spirit they are intended,based on their merits?
The writer has raised very pertinent issues from his view point. I am Not addressing it from ESCOM’s point of view but I would like to point out 1 or 2 things.
It is not the responsibility of ESCOm to provide street lighting rather ESCOM is only to provide the energy for lighting. If you are driving through Tsangano T-Off you will notice that the Mozambique side has street lighting yet Malawi side is dark. ESCOM however provides the energy for those Mozambique street lights to light. Any City, Town or City Council can put up street lights and will be connected to the ESCOM supply but will have to pay bills of course. It is therefore wrong to blame ESCOM for the dark streets around the country.
Taking a loan is indeed a viable business development strategy but one has to weigh how he is going to repay that loan. It is not just a matter of obtaining a loan without due consideration and planning on how to repay that loan. Who knows that ESCOM plans to get a loan after getting the tarriff increase approval from which they will be assured of enough revenue from which to repay the loan. Let the government concentrate on public service delivery and where its business institutions can afford, they should properly manage as a business and generate their own resources. Getting a loan willy nilly saying government will repay it when ESCOM defaults will be even a bad management precedent putting undue pressure on Govt coffers for institutions that can manage to raise their own money.
This is in my opinion as a layman. Wish indeed ESCOM responded.