ESCOM Bemoans Reduced Applied Basic Tariff Increase

Electricity Supply Corporation of Malawi (ESCOM) says Malawi Energy Regulatory Authority (MERA)’s approval of 31.8 per cent increase in base tariff has impacted them negatively.

ESCOM Executive Director, Allexon Chiwaya, said this on Tuesday in Blantyre during a press briefing that they had applied for a 60 per cent increase to cater for major projects like the Mozambique-Malawi Interconnector that has had its investment costs deducted while the upgrading of Nanjoka Substation in Salima and the Eastern Transmission backbone projects have been dropped.

“The Base Tariff submission by ESCOM provided MK57 billion as estimated cost for the Mozambique-Malawi and as part of the review by MERA.

“A sum of MK11 billion was deducted in the 2014-2018 base tariff leaving MK46 billion. However, there has been a further MK20 billion reduction leaving MK26 billion in the approved projects for the 2014-2018 base tariff,” said Chiwaya.

He said with the dropping of the upgrading of Nanjoka Substation in Salima as well as the Eastern Transmission backbone, ESCOM will not be able to supply power to the Salima –Lilongwe Water Project and Salima Cotton Factory which require 30 megawatts and 5 megawatts respectively.

“For us to supply such power to the projects, we were required to upgrade the substation from the current 15 megawatts to 50 megawatts to meet the anticipated demand at an estimated cost of MK4.1 billion.

“On the other hand, the Eastern Transmission Backbone project involved the replacement of the obsolete 132 KV wooden pole structure power line with steel towers on the Salima- Chintheche line so as to reduce power interruptions to the northern region caused by regular maintenance and forced outrages,” he added.

He said a sum of K104 billion has been deducted for the three projects which resulted in the understatement of the revenue requirement towards financing cost and depreciation by MK23 billion.

Meanwhile, Chiwaya said they are going to engage MERA to seek consideration on the three projects.