Escom gets boost To recover k40bn
Two parliamentary committees have pledged to help Electricity Supply Corporation of Malawi (Escom) to recover about K40 billion that government ministries, departments and agencies (MDAs) owe it.
Public Accounts Committee (PAC) and Natural Resources and Climate Change Committee chairpersons made the commitment in Lilongwe on Wednesday during public hearings on Escom’s 2023-2027 Electricity Base Tariff Application.
Their sentiments followed a presentation by Escom chief operations officer Maxwell Mulimakwenda who said MDAs owe Escom a total of K40 billion in unpaid bills.
He said Escom has incurred K87 billion in additional costs, which has affected its revenue.
Said Mulimakwenda: “As Escom, we don’t manufacture electricity, we buy electricity. In the 2018-2022 Base Tariff period, we were given K313.8 billion to buy the commodity, but we bought K401 billion worth of electricity, meaning we incurred an additional K87 billion expenditure.
“Of this amount, K40 billion is owed by government ministries and departments, including Blantyre Water Board.”
He said Escom has installed prepaid meters in some MDAs to deal with the challenges but most are yet to be operationalised.
In his contribution, Natural Resources and Climate Change Committee chairperson Werani Chilenga said the problem lies with the Ministry of Finance for providing inadequate funding to MDAs.
“That money is supposed to be funded through the normal other recurrent transactions [ORTs], but because they are underfunded it is difficult for them to pay the arrears,” he said.
Chilenga said they have been engaging the Ministry of Finance on the arrears, but to no avail.
“As a committee, we have not given up and we will engage them again during the coming Mid-Year Budget Review Meeting of Parliament. We want this settled,” he added.
PAC chairperson Mark Botomani said his committee will work with Escom to recover the debt.
Secretary for Energy Alfonso Chikuni said Escom needs capital to operationalise installed prepaid meters.
Escom is seeking a 67.9 percent tariff hike to be implemented over a four-year period, but the general feeling among consumers during tariff consultations was that the proposal is unrealistic.
The application for the tariff increase is set to be a successor base tariff to the one implemented from 2018 to 2022 and will mean electricity consumers paying an average of K177.26 per kilowatt hour (kWh) from the current average of K104.46/kWh.
However, the proposal comes at a time Escom is faulted for failing to meet some key performance indicators.
In his reaction in Blantyre on Monday, Consumers Association of Malawi executive director John Kapito yesterday said Escom was being unfair as it is simply pushing its inefficiencies to consumers.
“If electricity tariffs go up, everything goes up too. We want these charges to be equal to the services we are getting from Escom. Sadly Escom is making the tariff application yet delivery of service is still poor,” he said.
The fresh electricity tarrif hike proposal comes against a background of water boards implementing an average 50 percent tarrif hike from June 1 this year.
The meeting in Lilongwe was the second convened by Malawi Energy Regulatory Authority after the first in Blantyre on Monday. The next meeting is set for Mzuzu this Friday.
