Escom, PPDA differ on Aggreko contract

Electricity Supply Corporation of Malawi (Escom) and the Public Procurement and Disposal of Assets Authority (PPDA) have differed on the no objection status on the contract between Escom and Aggreko.

Escom told a Parliamentary Committee on Natural Resources and Climate Change on Tuesday that PPDA issued it with a no objection to enter into a contract with Aggreko to supply power through generators.

Escom acting chief executive officer Clement Kanyama on Tuesday surprised the committee when he read out a no objection letter which he said PPDA issued but PPDA director general Edington Chilapondwa and other officials said they were not aware of it.

Kanyama said Escom was given a go-ahead on the deal and was ready to provide the no objection letter to PPDA and the committee.

Escom’s response follows the committee’s demand for an explanation why Escom continues to extend the Aggreko genset contract which is expensive and a burden to Malawians.

Kanyama read out the no objection to the committee and PPDA officials. He said the letter was signed by a Mr. L Kumwenda for Director of Public Procurement on April 25 2017.

“On April 25 2017, the director of Public Procurement wrote Escom referring communication between Escom and that office where they informed Escom that a no objection had been granted for Escom to award contracts for hiring of emergency power generation plant and equipment as follows:

• 35 megawatts at Mapanga in Blantyre by Aggreko
• 25 megawatts at Kanengo in Lilongwe by Aggreko
• 18 megawatts at Chinyama in Kasungu

“You may now proceed to contact the successful bidder and please ensure that all formalities for effective administration of this contract are indicated,” reads the correspondence that Kanyama referred to.

At the meeting, PPDA also distanced itself from the contract, saying it never approved the initial contract, but only nodded to requests for extensions that Escom has been making.

However, Kanyama agreed with the committee that Malawi should have gone into a better deal than the Aggreko contract.

He said there are efforts to phase out the Aggreko contract extensions that have been happening.

Kanyama said government plans to buy standby gensets that will be given to the Electricity Generation Company of Malawi (Egenco).

Egenco spokesperson Moses Gwaza confirmed that there is an arrangement to procure gensets to replace the Aggreko ones, but the government is yet to fund the process.

The contract has for a long time been questioned for being a burden on Malawians as electricity rates are high due to use of gensets.

Every year, Escom pays $12 900 (about K10.8 million) to Aggreko for the gensets and also procures fuel worth about K2 billion a month. Every week Escom spends K500 million on fuel when using the gensets.