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EU gives K166bn for power project

The European Investment Bank (EIB) has provided 85 million euro (about K166 billion) to the Malawi Government to finance the upgrade of the Eastern Power Transmission Line.

The line passes through the lakeshore districts of Salima and Nkhotakota to connect to the Eastern Power Pool in Tanzania.

Chithyola-Banda (L) and Skinnebach sign the agreement

The financing agreement, signed yesteday in Lilongwe, includes 55 million euro (about K107 billion) concessional loan for the rehabilitation of the line and an additional grant amounting to 30 million euro (about K58 billion) from the European Union (EU).

Minister of Finance and Economic Affairs Simplex Chithyola Banda and the EU Ambassador Rune Skinnebach signed the agreements.

Speaking after signing the agreement, Chithyola-Banda said through the project, the government seeks to unlock private investment in the power sector to meet the country’s energy requirements.

“We will provide necessary incentives for  the private investors looking to invest in the power sector and there are a number of investors already interested to invest in the power sector and we are discussing with them,” he said.

In his remarks, Skinnebach said the country’s national power grid suffers from years of underinvestment, while Electricity Supply Corporation of Malawi (Escom) is constrained by weak financial performance and non-cost reflective tariffs.

He said: “The efficient distribution of power and the addition of new renewable energy resources are constrained by overloading in critical parts of the ageing network.

“There is, therefore, an urgent need to rehabilitate transmission infrastructure to increase energy access and improve the business environment.”

Skinnebach said improving the business environment by providing key infrastructure such as power can address the underemployment situation affecting the country’s youths.

Escom chief executive officer Kamkwamba Kumwenda said in an interview the project is a major boost towards power supply and distribution efficiency, adding that it will enhance mining and agro- processing industries.

He said the transmission line was built 42 years ago with wooden poles and is now in bad shape, causing frequent power outages and accounts for about five percent of Escom’s power transmission losses.

Kumwenda said the transmission line will enable the sole power supplier to interconnect with Tanzania for alternative power source.

“Most importantly, it is the line that will connect with the Eastern Power Pool in Tanzania,” he said.

The Africa Development Bank is also expected to provide financing towards the project through a separate arrangement, according to the statement of the agreement.

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