The Malawi Government’s political decision to keep fuel pump prices unresponsive to market forces has thrown Malawi Energy Regulatory Authority (Mera) in fresh turmoil which has led to suffocation of rural electrification funding.
Briefing the Parliamentary Committee on Natural Resources and Climate Change as well as Parliamentary Committee on Government Assurances and Public Sector Reforms in Lilongwe yesterday on Malawi Rural Electrification Programme (Marep) Phase 9 status, Ministry of Energy deputy director of finance Rabson Chomba said Mera has not remitted the rural electrification levy from the fuel pump price since July 2022, thereby frustrating the programme.
The revelation, which has also put under threat the future of Marep Phase 10, comes hot on the heels of earlier reports that the regulator also owes fuel importers in excess of K785 billion in import losses incurred due to low prices.
Meanwhile, fuel importers were as of August this year holding on to about K330 billion in road maintenance levies collected after Mera failed to pay for their losses as the Price Stabilisation Fund was also depleted.
During yesterday’s meeting, Chomba said to complete Marep 9, the ministry needs K76.5 billion, with K12 billion required for the construction of power lines and K63.6 billion for additional materials.
But he said the ministry has only K570 million in the Marep account.
Said Chomba: “The rate at which Rural Electrification Act continues not being complied with threatens the completion of Marep Phase 9 and the future of Marep Phase 10 and beyond. Successful implementation of Marep activities solely depends on the levy collection through Mera.
“Remittance of the arrears, including the amount due for the present period, is critical for the smooth operations of the Rural Electrification Programme.”
In a normal scenario, fuel levy contributes over 80 percent of the funds for Marep, with the rest covered by other energy levies on electricity and gas.
Marep 9 was supposed to be completed by August 31 2024 after the ministry issued contracts for construction of power lines in December 2023.
However, progress for construction of power lines currently stands at 67.33 percent. Of the 460 sites that were planned to be connected, 229 sites have had works completed, 127 have works in progress while 94 are outstanding.
Chipping in, Ministry of Energy deputy director for rural electrification Francisco Chingoli said the ministry is using the few available resources, collected through gas and electricity levies, to ensure that Malawians have access to electricity.
“We are getting about K600 million per month that we are using to ensure that construction of Marep 9 has not been stopped and we believe we will finish this process,” he said.
On Marep 10, Chingoli assured the committee that the Ministry of Energy is ready to implement it if resources are made available.
In the presentation that the ministry made before the committee, it was indicated that there has been engagement with Mera and Treasury on the issue of Marep funds.
Besides Marep 10, the Ministry of Energy has also pended the Solar Home Systems to 2000 very low income households, stakeholder engagements on Revised Marep Masterplan, construction of Gumulira Solar PV mini-grid, construction of Kasangazi mini-hydro mini-grid and construction of Marep Regional Warehouses (Blantyre and Mzuzu).
Committee co-chairperson Werani Chilenga said the way out on Marep challenges is to increase the price of fuel so that suppliers are able to remit fuel levies and recover losses.
He said government should seriously consider adjusting fuel prices, otherwise projects will continue to suffer.
Chilenga expressed concern that some stakeholders were not happy with a report by the Natural Resources Committee of Parliament that recommended a slight adjustment in fuel prices.
He said: “Look at where we are now, we are failing to implement the Marep project and this is just like citizens refusing to pay tax for development of their own country. If things have gone up someone has to pay tax for things to move in this country.”
Recently local contractors held a vigil at Roads Fund Administration and threatened to take over toll gates to forces RFA pay them over K50 billion. RFA obtained an injunction to restrain the contractors from taking over toll gates.
