Govt, Egenco fight overKammwamba coal project

The Ministry of Energy and the Electricity Generation Company (Egenco) are locked in a fight over Kammwamba Coal-fired Power Plant with the latter defying a May 31 2023 deadline to hand it over to government.

Egenco and Treasury had, by press time, not responded to our inquiries on the matter, but Ministry of Energy confirmed in a written response on Wednesday that Egenco is clinging to the 300-megawatt (MW) thermal power project despite being instructed to surrender it.

In a written response to Weekend Nation this week, Secretary for Energy Alfonso Chikuni explained that government is concerned that the project has not registered any tangible progress these past 10 years and wants to hand it over to other independent power producers (IPPs) to ensure that funds already invested do not go to waste.

Said Chikuni: “But management of Egenco has rejected government’s request, citing various issues, including the money they have already invested in the project. This has added complexity to the situation, and it requires careful consideration and resolution.”

The project, which would be one of the biggest investments in the energy sector, was hatched in 2013, but has not taken off due to financing challenges.

On May 17 2023, Chikuni wrote a letter to Egenco chief executive officer William Liabunya titled ‘Repossession of the Kammwamba Coal Fired Power Project’ indicating that government had decided to repossess the project.

In the letter, Chikuni told  Egenco that the move was in line with the 2018 Malawi’s energy policy, which, among others, is keen to diversify the country’s energy sources both in terms of technology and location of power plants to reduce the risks associated with hydropower stations.

Reads the letter in part: “Egenco is advised to follow the due process to withdraw from the Public Private Partnership Commission. It will be much appreciated if this whole process is completed by 31 May 2023.”

Records show that a feasibility study which Egenco started in August 2019 and cost K2.5 billion, was completed in September 2021 and had two main components, namely updating of a previous techno-economic feasibility study and Environmental and Social Impact Assessment (Esia)

But Parliament has queried the ministry’s decision to take over the project, arguing that IPPs have not demonstrated that they are capable of handling big projects.

In an interview on Tuesday, the Parliamentary Committee on Natural Resources chairperson Werani Chilenga cited the $1billion Mpatamanga Hydro Power Station, which is expected to be completed in 2025 and produce 350 megawatts (MW), as one that IPPs are failing to do to do.

Said Chilenga: “Let the IPPs show that they are capable by doing the Mpatamanga project. As Parliament, we have always supported Egenco on this project and changing goal posts won’t help.”

But Chikuni insists that the ministry is committed to finding ways to fast track rolling out of the project, saying efforts will be made to identify factors that have contributed to the delays and implement measures to accelerate progress.

He indicated that this may involve engaging relevant stakeholders, conducting assessments, and taking necessary actions to overcome the obstacles that have hindered the project’s advancement.

Weighing in on the issue, former minister of energy Grain Malunga pointed out that what is happening between the two parties is a sign of conflict of interest, adding that the shareholder may be dictating issues that may not have been discussed with the operator.

He argued that commercial parastatals such as Egenco should make financial and economic decisions independent of the government.

Meanwhile, the Forum for National Development (FND) has written the Anti–Corruption Bureau to investigate government’s proposed repossession of the project.

In a letter dated October 9 2023, which has been copied to the Public Appointments Committee of Parliament, FND national coordinator Fryson Chodzi wants a thorough investigation into the funds that the country has invested in the project as well as how the government will be compensated.