ESCOM Staff Union petitions Ministry of Labour on alleged illegal setting up of independent power market company

By Duncan Mlanjira

Electricity Supply Corporation of Malawi (ESCOM) Staff Union (ESU) has sent a petition to the Ministry of Labour reporting that they are in dispute with its executive management over further unbundling of the power utility by setting up of Power Market Limited (PML).

Setting up of PML — in line with public reforms — ESCOM’s Single Buyer Function (SBF) has been curved out to form an independent function under the new company, PML.

According to the Union, setting up PML is illegal as it contravenes Section 4 (2) of the amended Electricity Act (2016), that says: “A holder of a transmission licence before commencement of this Act, shall hold simultaneously licences for distribution, imports, exports, system and market operator and single buyer”.

The Union is of the strong view that the first unbundling process, that involved delinking power generation from ESCOM and setting up the Electricity Generation Company (EGENCO), resulted in a financially weaker ESCOM and increased in electricity tariff for the customer.

And with this further unbundling of SBF, it is set to increase overhead costs in the power sector and further increase the cost of supplying power to the customer, “which is unstainable”.

“The Union is aware that these steps with either lead to tariff increases — which most Malawians cannot afford — or will lead to job losses of our members,” says the petition signed by the Union’s secretary general  William Myamula and copied to ESCOM’s Chief Executive Officer, Allexon Chiwaya; ESCOM Board and Comptroller of Statutory Corporations.

The Staff Union reports that it met ESCOM executive management on September 18, 2020 in which their grievances were not favorably address and after several attempts to engage the Minister of Energy, Newton Kambala failed, they decided to channel their concerns to the Ministry of Labour.

Energy Minister Newton Kambala

The petition says the executive management informed the Staff Union that PML has been formed in line with public reforms.

“However, Executive Management could not address the illegality of the setting up of the said company which contravenes Section 4 (2) of the amended Electricity Act (2016).

“In our view, this means the Single Buyer Function (SBF) should remain within ESCOM,” says the petition written on October 9.

The Union says they made four attempts to discuss the development with Minister of Energy Kambala since 20th September, 2020 but the efforts failed to yield any results.

ESCOM CEO Allexon Chiwaya (left)

They further say the setting up of PML has not come up with safeguards to ensure sustainability of employment for ESCOM staff members as it will result in reduced revenues “whose tariff to the customer is not cost reflective and does not benefit from any subsidies from Government”.

“The Union has also noted with concern the power imbalance in the energy sector as the Secretary to the President is the chairperson of both EGENCO and PML Boards leaving ESCOM very disadvantaged.

“This set up will affect the employment or the terms of employment or the conditions of labour or the work done to to be done or the social and economic interests of ESCOM’s employees as witnessed during the time when the Chief Secretary to the Government was chairperson of the EGENCO Board and Malawi Energy Regulatory Authority (MERA).”

The Union further highlights that even after the unbundling of ESCOM to set up EGENCO has not resulted in increased power generation in the country as envisaged by Government and other advocators of the model.

The Union and its members — some of whom are experts with vast experience in the electricity sectors — reportedly stated in 2015 that the increased power generation used to justify the formation of EGENCO would not be the case.

The dispute has been a subject of repeated endeavors by the Union to engage both the Government and ESCOM executive management to address the mentioned issues of concern.

Having left with no other options, the Union demands that “ESCOM executive management should seriously consider and expedite the process of resolving our concerns to our satisfaction so that we can concentrate on our respective jobs and continue positively to the process of unbundling of ESCOM as expressed by Government”.

“Furthermore, an independent study on implication of SBF outside ESCOM should be immediately instituted, where ESCOM staff will be engaged,” says the petition.

Kambala during his visit at ESCOM in August

Soon after his appointment as Minister of Energy, Kambala visited ESCOM Power Station at Chichiri in Blantyre on a familiarization tour as well as for a comprehensive meeting with members of management.

Kambala told the media after his visit that ESCOM was owing banks and other suppliers over K40 billion due to among other things, inadequate revenue generation caused mainly by low power generation as well as effects of COVID-19 pandemic.

One of the suppliers ESCOM owed money to at that time was EGENCO and when asked if this company was necessary, Minister Kambala had said there was need to assess if EGENCO is indeed serving its purpose well.

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He had said the idea to delink ESCOM’s services was necessary at the point it was initiated but government might consider to evaluate if EGENCO is still needed.

However, Government went ahead last month to appoint a board of directors for EGENCO that has Secretary to the President and Cabinet, Zanga-Zanga Chikhosi as the chairperson with Betty Mahuka, Oswin Kasunda, Henry Kadzakumanja, Arthur Mandambwe and Evans Msiska as other members are.

Kambala has told the media after his tour of the Power Station that management would be asked to write a report on why they ended up with such huge debts and see how the government could come in to assist.

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Kambala had also said it was disheartening that ESCOM had been plundered by unscrupulous politicians and cadets from the past government — such as the massive siphoning of fuel by non-members of staff, most of whom were connected by the previous government.

He had pledged that the new government was set to make sure that such corruption should be stopped once and for all to help the corporation stabilize in order to provide excellent services to the people and the industry.

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