Escom board chair vows to clean up mess

 

Escom board chairperson Thom Mpinganjira has pledged to spruce up the image of the power utility, which has been in the limelight for various reasons, including corruption allegations.

State-owned Electricity Supply Corporation of Malawi (Escom) has also been accused of inefficiency in its operations, largely due to serious misprocurement which has been prevalent in recent past.

In an interview monitored on privately-owned Capital Radio on Tuesday, Mpinganjira, who is also group chief executive officer and shareholder of financial services group, FDH Financial Holdings Limited, said Escom board has so far moved in and made various recommendations aimed at improving the operations and the performance of the parastatal.

The newly-constructed power infrastructure at Phombeya in Balaka handed over to Escom

He cited the decision to look into the financial position of the power utility, which earlier sought a K58 billion bailout from Treasury, but was rejected on the premise that it will distort the economy.

Said Mpinganjira: “When you are outside an institution like Escom, you have a totally different position than when you get inside it. Earlier, I talked about how shocked I was to hear that the organisation wanted to borrow K58 billion, which I and the board stopped until we had dialogue with the shareholder, which is Malawi government.

“After three weeks of dialogue, it was clear that Escom would have to find means and ways of filling the gap in liquidity crunch.”

Escom has found itself in this position due to, among others, irregular procurement decisions that have left the sole power supplier with materials that it may not use for as long as 10 years while some would become too technologically obsolete to be of any use to the company.

The parastatal has also seen an increase in its inventories—a list of goods in stock—to K22 billion this year from K3 billion in the 2011/12 financial year, which affected the firm’s debt stock and its financial position.

But Mpinganjira said it is unfortunate that the biggest highlight which has captured the public’s attention about the institution is its mismanagement of the company.

He nonetheless expressed concern over the current state of the company’s liquidity position and its finances which he said was as a result of its failure to implement tariffs for the past four years despite being approved by Malawi Revenue Authority (Mera).

Earlier this month, Malawi Energy Regulatory Authority (Mera) was consulting the public on Escom’s proposed 60 percent four-year electricity tariff hike plan, which attracted the wrath of Consumers Association of Malawi (Cama) and Malawi Confederation of Chambers of Commerce and Industry (MCCCI).

Cama executive director John Kapito said the tariff increase plan is unjustifiable considering the current state of the energy sector.

“We find it stupid for anybody to hike the price of something that you do not have,” he said.

In the base tariff proposal Escom submitted to Mera on April 20 2018, the power utility argued that the average cost of supplying electricity is K126 per kilowatt per hour, according to the 2018 Cost of Service Study.

Escom is currently facing power supply challenges due to low water levels in Shire River, which is the source of 90 percent hydro power generation.

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