* The four-year base tariff which was approved by Malawi Energy Regulatory Authority (MERA) in September 2023
* Assures that the tariff adjustment would significantly help improve their services in its commitment to serve customers better
By Duncan Mlanjira
With effect from today, February 1, Electricity Supply Corporation of Malawi (ESCOM) has increased its electricity tariff by 16% across all customer categories.
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A public notice from ESCOM management reminds its customers that this is the second tranche of the four-year base tariff which was approved by Malawi Energy Regulatory Authority (MERA) in September 2023
ESCOM assures that the tariff adjustment would significantly help improve their services in its commitment to serve customers better.
When MERA agreed to ESCOM’s proposal to raise the electricity tariffs to 50.8% as first tranche, Chief Executive Officer, Henry Kachaje told the media that the adjustment, is to be done in phases for four years.
He attested to ESCOM’s proposal that the adjustment was justifiable, saying it will improve high quality service delivery to ESCOM customers.
Henry Kachaje
“The Authority believes that granting this tariff adjustment will enable the power sector to realise enough revenues for investment, system maintainance, operations and other appropriate costs to sustain provision of services to customers,” he had said.
In June 2023, when MERA was reviewing ESCOM’s proposal application, the Authority said this was for the period 2023 to 2027 and is a successor base tariff to the one that was implemented from 2018 to 2022.
MERA said the new application was a significant reduction from the 99.9% that ESCOM and the Power Market Limited (PML) jointly asked before PML was dissolved.
It further said this in line with the 2017 Tariff Methodology, that once every four years, ESCOM submits a base tariff application to MERA for consideration and approval, adding that the tariff application contains revenue requirement (RR) for a four-year period to finance operational and capital requirements.
In a statement, MERA further said the application was revised by ESCOM to align with the new market structure, following Government’s decision to dissolve PML and transfer the Single Buyer function back to ESCOM.
MERA further said the base tariff application for the 2023-2027 period had been prepared in the context of Power Sector Reforms being implemented by the Government following the enactment of the Electricity Amendment Act in 2016.
“The main objective of the reforms is to provide a conducive environment for private sector participation in the electricity sector, especially in generation,” the statement said in June 2023. “The reforms culminated into unbundling of generation from ESCOM and the subsequent formation of the Electricity Generation Company (EGENCO) which took over generation assets formally owned by ESCOM.
“The other key component of the reforms was the establishment of single buyer and SMO licensees to perform various activities in the electricity supply chain. As a result of these reforms, the country is now able to procure generation from independent power producers (IPPs) to supplement Government efforts in increasing power supply in the country.”
In building the 2023-27 business plans, which have informed the proposed tariff adjustment, MERA said ESCOM carefully took into account suggestions and proposals from its large customers and key stakeholders such as the Ministry of Energy, the Energy Regulator (MERA), Malawi Confederation of Chambers of Commerce and Industry (MCCCI), Economists Association of Malawi (ECAMA), Society of Accountants in Malawi (SOCAM), Consumers Association of Malawi (CAMA), Miners Association, industrial customers (Illovo, Blantyre Water Board), Hard talk Energy, Sunbird Hotels etc.
“ESCOM also regularly gathers feedback from customers through ESCOM’s customer service outlets as well as from social media platforms.
“The common themes from the feedback received from our customers and stakeholders which have formed the basis of the priorities and objectives of the 2023-27 revenue requirement determination and submission,” Kachaje had said.
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