Escom feels shortchanged on tariffs
Electricity Supply Corporation of Malawi (Escom) Limited says the Ministry of Energy decision of November 10 2023 to suspend implementation of a 40.92 percent electricity tariff adjustment has negatively impacted on its operations.
But Escom chief public relations officer Kitty Chingota said in a written response yesterday that following the expiry of the suspension period on April 1 2024, the parastatal will not increase the tariff pending further discussion.
She said the delay to implement the electricity tariff adjustment has affected Escom’s operations as power producers were still basing their charges on the suspended adjusted tariffs. However, she could not quantify the amount involved.
Said Chingota: “It is only Escom Limited suspending the Ataf [automatic tariff adjustment formula] while producers are still charging Escom at the adjusted tariff.
“It means Escom must find funds somewhere to pay the producers and buy materials for maintenance and new connections. The delay will affect the service delivery.”
On November 9 2023, Malawi Energy Regulatory Authority (Mera) approved an increase in electricity tariffs by 40.92 percent based on Ataf following a 44 percent kwacha devaluation.
But about three weeks later, Minister of Energy Ibrahim Matola announced a freeze on the implementation of the new tariff adjustment.
He said the decision was a consideration after people complained about commodity price increases due to the devaluation.
Reacting to the developments yesterday, former Escom chief executive officer Kandi Padambo described Escom’s situation as “misnomer,” saying the input cost is supposed to match output if any institution, including Escom is to perform efficiently.
He asked government to approve Escom tariff adjustment because most of its maintenance expenses involve materials that are imported and their costs depend on the value of the exchange rate.
Said Padambo: “With the way fundamentals have been moving in our economy of late, I think it will be unreasonable to expect that Escom can continue supplying electricity it was supplying at the same price before the devaluation.”
In a separate interview, Consumers Association of Malawi (Cama) executive director John Kapito observed that the Ministry of Energy’s directive to suspend the 40. 92 percent electricity hike affected both Escom and Electricity Generation Company (Egenco).
He said Mera should have intervened to address the issues between Escom and Egenco.
Said Kapito: “It is also important for Mera to go back and reverse all the high charges that Egenco had given to Escom and that has to be done now, because who is losing money is Escom. Egenco is getting money which they are not supposed to be getting.”
Mera public relations and consumer affairs manager Fitina Khonje asked for more time to comment on the matter.
Escom last week embarked on a drive to recover K65 billion in unpaid postpaid electricity bills owed by government agencies, private sector players and individuals.
