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Economy could lose $4.2 million daily—Mera

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BY TAONGA SABOLA:

The Malawi Energy Regulatory Authority (Mera) has said the local economy could lose $4.2 million daily without diesel power generators.

Mera Chief Executive Officer, Collins Magalasi, told reporters in Blantyre Tuesday that much as diesel power generators are considered expensive, they remain a necessary evil under the current circumstances.

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An acute shortage of power last year forced authorities to opt for diesel power generators as a short-term measure to address the situation, which nearly brought the economy to a halt.

Malawi is producing about 71MW from diesel generators located in various districts across the country to complement hydroelectric power which cur rently hovers between 230 and 250MW.

Despite the Electricity Supply Corporation of Malawi (Escom) paying about $79 million to hire diesel generators from Aggreko for two years, Malawi only uses the generators for an average of six hours a day.

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Magalasi said, in June alone, diesel generators consumed five million litres of diesel.

He said increasing the amount of time for running the generators could result in huge costs for diesel, thereby driving up tariffs.

“Others have argued that why doesn’t Malawi just abandon the expensive generators altogether. They argue that these things are proving to be costly therefore not economical.

“But what they are forgetting is that abandoning the generators could result in the country losing $4.2 million in a day. If you calculate that in a month, you will see that it’s a lot of money,” Magalasi said.

With Malawi heading towards the lean period in as far as water availability in Lake Malawi and Shire River is concerned, Magalasi said Malawians should not press a panic button, saying the situation will not be as worse as last year.

The Mera chief said additional energy from diesel generators, coupled with an anticipated 20MW from Zambia, would help to stabilise the situation.

He said authorities are controlling the flow of the Shire River to ensure that Malawi does not face an acute power shortage during the dry season between July and December.

“Under normal circumstances, the flow of Shire is supposed to be at 150 cubic metres per second but currently we are doing 130 cubic metres deliberately to preserve enough water to cater for the dry season. So there is no need for panic,” he said.

On Tuesday morning, Mera hiked the price of diesel by 9.4 percent from K815.80 to K890.90, a development anal y s t s argued could propel a hike in diesel-generated power.

But Magalasi said the diesel price hike is not enough to trigger a jump in electricity tariffs.

Escom has applied to Mera for a 60 percent tariff hike to be implemented between 2018 and 2022.

The hike, if given, would see a unit of electricity jumping to around K122, according to Mera.

The energy regulator is getting the input of various players regarding the proposed hike, before the power distributor holds public hearings to justify the move later this month.

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