Committee snubs Escom on tariffs

Parliamentary Committee on Natural Resources and Climate Change disagrees with Escom on raising tariffs

Post was last updated: March 21, 2023

The Parliamentary Committee on Natural Resources and Climate Change says it cannot advocate for an electricity tariff hike when Malawians are going through tough economic times.

The stance by the committee follows a plea by Electricity Supply Corporation of Malawi (Escom) to the Parliamentary committees Natural Resources and Climate Change and Government Assurances and Public Sector Reforms Programme to support their bid for a tariff hike which is expected to be presented to Malawi Energy Regulatory Authority (Mera) in the next two weeks.

Escom made the request on Saturday in Blantyre on the sidelines of a visit to Malawi Electricity Access Project stores by members of the two committees.

Speaking in an interview, Parliamentary Committee on Natural Resources and Climate Change chairperson Werani Chilenga said the committee would not want to accept issues that will not be good for people that elected them to Parliament.

He said: “People’s businesses have collapsed. If you look at the way people are accessing electricity, it is like there is no electricity that people are paying for or we can have a tariff increase for.

“They have sent the proposals to Mera, the best is for us to wait.”

In August last year, Escom and the dissolved Power Market Limited (PML) submitted a 99 percent tariff hike proposal to Mera upon expiry of the 2018-2022 base tariff schedules.

The proposed 99 percent hike, according to the two parastatals, was meant to cover another four-year period from 2023 to 2026.

However, following the dissolution of PML in January, Mera asked Escom to re-submit the tariff hike application.

Speaking during an engagement with the committees’ members, Escom chief operations officer Maxwell Mulimakwenda said the utility supplier is committed to reinforcing the grid and increasing connection, but requires  resources.

He said: “We are just making a plea through you chair that when we submit the tariff proposal, please support your company.

“Whenever there are things that we need to improve, please point them out, but support us where we need resources so that we can do our part in the development of this country.”

However, in an interview after the engagement, Mulimakwenda said while they sympathise with the public and acknowledge that the supply has been erratic, mostly due to the impact of Cyclone Ana which damaged Kapichira Power Station in January last year, Escom has to continue to operating.

He said: “Mid last year, there was devaluation of the kwacha and then the impact of inflation, we believe it is the right thing for us to apply a tariff increase even if we are working on the issues of restoring power supply.

“We ask our customers to understand us. We consider issues of affordability seriously. We believe that it is the right thing for us to make a tariff review submission.”

Under the 2022-2026 Electricity Base Tariff Application submitted to Mera, Escom and PML wanted electricity tariffs hiked by 80.75 percent from the current K104 per kwh to K187.98 per kwh in the 2022-2023, which is the first year of implementation.

In the 2023-2024 fiscal year, the firms proposed a K184.18 per kwh hike whereas in the 2024 -2025 and 2025-2026, the firms wanted a K210.59 per kwh and K249.15 per kwh increase.

The electricity tariff hike proposal also comes in the wake of another water tariff hike proposal by the country’s water boards by between 15 and 40 percent from April 1 2023.

Under the current 2018-2022 Escom Base Tariff Schedule, Mera in October 2018 approved a 31.8 percent base tariff for the four-year period.

The implementation of the base tariff was segmented into four annual tranches of 20 percent, 7.2 percent, negative three percent and 10 percent tariff adjustments for the first, second, third and fourth years in that order.

Source Link

Let us know what you think of this article and remember to add us on our facebook and follow us on our twitter. Come back daily for more Malawi business news.

Quick Links: Download Business eBooks | Ten Signs You Are An Entrepreneur | What is a Managing Director?