Escom tariffs are immoral

Honourable Folks, if only Escom were to face good competition as did Air Malawi, we’d have by now erected an epitaph of a badly run, highly incompetent service provider, best known for its efficiency in making load-shedding schedules.

But the so-called limited company, and the State that has 100 percent shareholding in it, have taken advantage of the sad fact that Escom enjoys a de facto monopoly in Malawi’s mixed economy to heap on the consumer the high cost of its gross inefficiency.

Two months ago, Finance Minister Dr Ken Lipenga, while presenting this year’s national budget, lamented the huge unquantified loss government incurs by subsidising almost all the goods and services it provides us, the citizens.

I guess he was alerting us to a done deal. Between April 2012 and now, Escom tariffs have gone up three times and the hikes are so punitive that now a unit of electricity is 80 percent more expensive than it was last year. I am sure we’ll be equally shocked when the story of water tariff hikes is fully revealed.

If you expected some respite on electricity tariffs, that may not come any time soon. Escom officials are on record as having said the hikes will continue. Till when? Well, the service provider wants to be able to break even. Nay, it’s a limited company now so why not make a profit, pay bonus to its management and dividends to its owner—the government?

This argument may make economic sense, but it lacks moral justification. Much of the woes of public utility providers in Malawi can only be attributed to years of gross abuse by politicians in government.

It’s not long ago when Hetherwick Ntaba, as spokesperson for UDF and DPP, argued it was not illegal for the party in government to use public resources for its functions, challenging anyone who did not like such a practice to go to court.

If there is one public institution that has over the years flouted good corporate principles of keeping costs low by cutting unnecessary expenses, that institution is Escom. It’s vehicles have ferried cadres of the party in government—starting from MCP, UDF and DPP—millions of kilometres at its own expense. In Malawi’s reversed understanding of social responsibility, Escom felt justified to do so.

Memories are also fresh when strong Finance ministers such as Dr. Mathews Chikaonda openly criticising the tendency by government ministries and departments to default on their electricity, water and telephone bills. At some point, the Treasury threatened to settle the bills at source and let the culprit operate on what remains of their cash-budget allocations.

Of course, such courageous ministers have been few in the history of Malawi. They do not even last. So many came, looked the other way while things were going wrong. Ironically, the politically appointed managers of paparatals were so timid that they could neither expose nor cut supplies to defaulters.

MTL was salvaged by the privatisation programme although it’s not clear how the proceeds from its sale were used. Government’s decision privatise water boards was vehemently opposed by the public, who rightly feared the consequences of making such a strategic resource fall prey to the profit interests of businesspersons.

For Escom, some dreamer decided the way forward for it to liberalise the business of selling electricity and created Mera to regulate the industry. Todate, investors have shunned the farce of competing with Escom in the sale of electricity. Now we hear that increasing tariffs will attract investors, really?

But how about the Malawian consumer, do the current salary levels in Malawi support the kind of pricing that government and Escom are championing? Does it makes sense that in this 21st century some who were all along using electricity—saving trees in the process—should now go to makala and chikoloboyi lamp? Is that progress?

Escom should balance the need for fair pricing with the need for organisational reforms. It’s to make it leaner and more efficient. The starting point is to do audit and get rid of staff who do not add value to Escom. Such pruning should not spare the board, either.

It’s also time government put the interests of the citizens above the partisan interests of the ruling party by ensuring that whoever is appointed by the President to the board of any parastatal is screened and endorsed by the Public Appointments Committee of Parliament. Otherwise, the old mistakes are being made so the burden can continue being pushed to the citizen. This simply is neither fair nor moral.

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  1. That was advice from IMF who wants electricity tariffs quoted in US$ so that international businesses that import electricity from Mozambique can make profits out of poor Malawians’ pockets.

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