Minister of Energy Jean Mathanga says foreign exchange shortages are increasingly stifling progress in the energy sector with players struggling to import fuel, spare parts, equipment and other critical inputs.
In her address to the Fifth Malawi National Energy Conference in Salima yesterday, she said the forex crisis is compounding challenges in the energy sector, in the process forcing Malawians to endure prolonged and frequent power outages.
“Our people continue to exper ience frequent and, in some cases, prolonged electricity interruptions,” said the minister at the conference attended by government representatives, development partners and energy sector stakeholders to discuss ways of addressing the country’s energy challenges.
Mathanga said shortages of foreign exchange were equally affecting the ability of utilities and energy companies to import essential inputs and meet some of their foreign-currency obligations.
She said the country’s electricity generation, transmission and distribution infrastructure also required significant investment and regular maintenance.
prolonged electricity interruptions.
| Lovemore Khomo
The forex constraints come amid persistent pressure on both electricity and fuel supplies, with the country’s power demand continuing to outstrip available generation capacity.
European Union head of cooperat i on Geo rge Dura said the energy sector required innovative financing models and an environment capable of attracting investment, given the limitations of public resources.
“Malawi therefore needs to explore innovative financing models while creating an enabling environment that can attract investment into the energy sector,” he said.
However, Dura said financing alone would not resolve the sector’s challenges.
“Innovative financing alone cannot solve this challenge either. What matters equally, and perhaps even more, is creating the conditions that make projects bankable,” he said.
In an interview, former Electricity Supply Corporation of Malawi (Escom) chief executive officer Kandi Padambo said Malawi needed increased investment to address inadequate generation capacity.
“We already have insufficient capacity to generate electricity, hence the need to increase and liberalise our budgets to revamp generation capacity,” he said.
Padambo a l so proposed construction of a fuel pipeline and greater use of railway transport to reduce fuel transportation costs and pressure on foreign exchange.
Mathanga said government was pursuing measures to expand access to electricity despite the challenges.
She said the $100 million Malawi Electricity Access Project had
connected more than 190 000 households to the grid and distributed over 253 000 solar home systems.
Mathanga said another $250.8 million World Bank-supported project is expected to expand grid and off-grid connections and electrify 1 280 health and education facilities.
Renewable Energy Industries Association of Malawi president Brave Mhone called for action to address the country’s energy challenges.
“Having her say what she has said and the challenge she has given us gives us energy that there is someone out there who wants to see action and is committed to action. It is up to us now to deliver,” he said.
Earlier this year, the World Bank urged Malawi Government to tread cautiously in mining deals and stressed that projected annual revenues of $600 million (about K1 trillion) depend on progressive fiscal regime and investment in energy.
In a report titled ‘From potential to prosperity: A roadmap for Malawi’s energy transition minerals’, the bank said Malawi needs to mobilise about $5 billion (about K8.7 trillion) in investments, with approximately 80 percent to be financed by the private sector, to be on sound footing to reap the benefits.
