Escom in talks with private power firms for electricity purchasing agreement

Post was last updated: December 2, 2015

The Electricity Supply Corporation of Malawi (Escom) has entered into talks with various prospective Independent Power Producers (IPPs) which are expected to lead to the signing of Power Purchasing Agreements (PPAs) between the stateown company and the investors.

Escom public relations officer, George Mituka, confirmed on Tuesda that there are several private companies that have approached Escom to invest in power production and sell directly to Escom as an off-taker.

He said negotiations with a number of IPPs are at an advanced stage and that Escom expects to sign agreements units a number of the companies “within the very near future”.

“The process involved is not simple. There is the reviewing of the IPP’s proposal, then drafting of a PPA and then negotiating the terms and conditions of the PPA before signing,” said Mituka.

“Before this process, the government signs a Memorandum of Understanding with the prospective investor. Within the process, our regulator, Malawi Energy Regulatory Authority (MERA) conducts a due diligence on the PPA before approving agreement in general and the IPP’s proposed tariff in particular,” he said.

He said the process is long and cannot be done overnight.

“Things like IPP’s capacity, Escom’s capacity to handle additions, tariff proposals and others all have to be seriously looked into,” said Mituka.

On whether Escom is afraid of competition hence the delays in signing of the PPAs, Mituka said there is no question of competition.

“The IPPs will be selling their power to Escom and if anything, they will be competing amongst themselves. As such Escom will buy from the most competitive of the lot,” he said.

He said Escom welcomes the IPPs as they will provide to the corporation and the country an increased supply of power, which is lacking now.

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