My take on Escom tariff hearings

Honourable Folks, I use electricity for lighting, heating water and cooking. Most of the appliances in the home—computers, TV, fridges, fans, etc.—also depend on electricity.

I guess that makes me different from most of the village folks. I could also be different from 90 percent of the Malawian population not connected to the Escom grid. Whether these are in urban or rural areas, they simply don’t have any access to electricity.

 But that doesn’t make electricity a luxury.

In this 21st century, we all ought to be using electricity. The huge operational costs attributed to the use of oil-powered generators at Kayelekera in Karonga  should serve as a reminder that our dream to generate forex in the medium term from the exploitation of minerals—and the growth of the entire industrial sector for that matter—hinges on the availability of uninterrupted electricity at competitive rates.

Those who have witnessed how the electric grain mill has replaced the diesel-powered one in both urban and rural areas (thanks to the Rural Electrification Programme), and how even barbers depend on electric power to ply their trade, will attest to how key electricity is to the commercial sector in Malawi.

So far Escom, a government-owned energy company, enjoys a virtual monopoly in the generation, transmission, distribution and sale of electricity. A handful other organisations, including Illovo and Lujeri Tea Estate, do generate some electricity for their own consumption.

I don’t really know why Escom, a statutory corporation, was incorporated in 1998 as a private limited company with government owning 99 percent shareholding and MDC 1 percent. This happened when Bakili Muluzi was president and it also applied to MBC-TV and one or two other parastatals.

It could be that donors influenced the decision to turn Escom into a private limited company as a way of stressing the need for it to operate and behave as a business and not as a repository of jobs for the president’s cronies or financial and material resources for government and the ruling party. Those that have been around since the advent of multiparty politics know how the so-called parties in government have abused parastatals such as Escom, Water Boards and, before its privatisation, Malawi Telecommunication Limited.

I’d also like to believe that it’s in the spirit of charging rates that allow for the recovery of costs with a reasonable mark up that Escom wants Malawi Energy Regulatory Authority (Mera) to allow it to effect about 40 percent electricity base tariff review for four years—January 2014 to December, 2017. These adjustments come fast on the heels of a cumulative 124 percent tariff increase since May 2012.

One justification for this increase, I’m reliably informed, is to attract other investors in the industry. Interestingly, the clear opening to  competitors is may be in electricity generation which can then be sold to Escom so that it can, in turn, re-sell it to customers at a profit. It’s a private limited company, remember?

I’m also reliably informed that Escom has to significantly increase its tariffs to match with the comparatively high rates that will inevitably come with the forthcoming Mozambique Interconnect Project. We are suddenly reminded that our electricity tariffs are the lowest in the Sadc region.

Why shouldn’t our tariffs be low when we generate our own electricity from the waters that Almighty God graciously blessed our beautiful country with? Again, why should our government see merit in comparing our tariffs with the Sadc average when it has never thought of aligning our minimum wage with the Sadc average? How shall we afford Sadc tariffs with Malawi wages which are arguably the lowest in the region?

Mera has decided to conduct public hearing on Escom’s tariff review request in the South, Centre and North between 5 and 20 December. Already Mera has indicated “overwhelming” public response to its request for views and comments on Escom’s tariff application. Your guess is as good as mine on what people think about Escom—it’s sweet tooth for tariff hikes while providing poor services, wasting resources and failing to reach out to more consumers despite being a monopoly.

But it won’t be easy for Mera to be on the side of the people. Despite operating under a law that guarantees its independence from “interference of direction of any other person or authority”, Mera will have to factor in the vested interest of government which already received K35 million from cash-strapped Escom in the name of “corporate social responsibility”.

Mera will also have to consider the people’s concerns in the context of government policy direction, as ably articulated in Parliament by former Finance Minister Dr. Ken Lipenga that we, Malawians, must wean ourselves from government subsidies. I understand that statement to mean we should be prepared to pay electricity tariffs at whatever rate Escom deems appropriate or forego its services.

Who then is Mera to change that policy direction even if Escom’s tariffs include costs of government blunders and its own inefficiencies?