Fingers crossed on 50MW project
Electricity Supply Corporation of Malawi (Escom) and Press Corporation Limited (PCL) plc are keeping their fingers crossed on the approval of their power purchase agreement (PPA).
This is after Malawi Energy Regulatory Authority (Mera) rejected an initial submission from the two organisations.
Escom, the country’s single buyer of electricity, and PCL concluded their PPA for the latter to start generating 50 megawatts (MW) of solar power at Nkhoma in Lilongwe as an independent power producer (IPP).
The investment is estimated at $52.5 million (over K90 billion).
The power utility submitted the PPA to Mera in June this year, but after examining the agreement, Mera sent it back for refining, Escom has confirmed.
Escom chief executive officer (CEO) Kamkwamba Kumwenda said in an interview Mera sent back the proposal after querying certain elements in the documents.
He said: “After our submission, they were supposed to take it to the board for approval, but their technical team raised a few queries. So, they sent it back to us and we forwarded it to PCL.”
Kumwenda said PCL revised the documents and resubmitted to them for further scrutiny before the latter resubmitted the documents to Mera on August 23.
Mera consumer affairs and public relations manager Fitina Khonje, while confirming review and submission and raising some issues with Escom, could not indicate when the process would conclude.
“We reviewed the submission and gave feedback on areas that needed refining. We received the requested information last week [two weeks ago],” she said.
Khonje said Mera looks at legal, technical and financial aspects of the agreement when reviewing the PPA.
PCL announced in July last year that it was geared to set up the 50MW solar power plant in Lilongwe by the end of this year, with operations starting in 2025.
PCL chief executive officer Ronald Mangani is quoted on the corporation’s website as saying that they secured an approval from Escom in April this year to connect to the 132KV busbar at its Nkhoma substation after implementation of the Malawi-Mozambique 400KV transmission interconnection project.
“We are now setting up a special purpose vehicle (SPV) to conclude a power purchase agreement with Escom and proceed to implement the project as land has already been identified at Nkhoma in Lilongwe,” he said.
Mangani described the project as critical because it would assist in addressing the power challenges the country is facing.
Malawi has a total installed power capacity of approximately 441.95MW against an estimated demand of 527MW, which continues to rise as the mining sector picks up steam.
In an interview with Weekend Nation, Mangani said his engagement with Mera management suggests the authority fully supports the project.
“In terms of when the process of getting the approval will be concluded we cannot say, but we have high hopes that it will be done very soon,” he said.
Both Kumwenda and Mangani could, however, not reveal the queries Mera raised on the documents submitted, describing the issues as “very technical and internal”.
But Kumwenda said the 50MW was significant as it will add the much-needed additional power to the system.
“But, most importantly, this [PCL] is a local investor so the exposure to us is not as much as having foreign investors coming into Malawi because what happens is that when investors come to Malawi, they repatriate the proceeds back to their country of origin or where they got the finances from to pay back the loans.
“But with PCL being a local entity, we will be paying in Malawi kwacha and there will be no need for them to externalise the funds, so that is a plus for us,” he explained.
Malawi has close to 30 IPPs that have licenses but last year, the Ministry of Energy said only four are operational, a development that has affected the country’s energy needs.
