The Malawi Energy Regulatory Authority (Mera) has given Escom the go-ahead to hike electricity tariffs by 13.5 percent, saying the move will enable the power utility company raise funds for some projects aimed at improving power supply.
The announcement was made in Lilongwe on Wednesday at Mera headquarters. The development means customers will now be paying K41 per unit kilowatt from K35.69 from 2nd November, 2015.
A statement released by Mera states that the move follows a performance assessment of the Electricity Supply Corporation of Malawi (Escom) to review the targets the company was given as a precondition before an earlier proposed adjustment of 18.39 percent.
“The approved tariff is intended to catalyze a financially healthy and self-sustaining electricity sector that is capable of generating sufficient revenue and creditworthiness for Escom at fair and reasonable tariffs to end users,” says the statement.
In an interview after the announcement Wednesday, Mera Chief Executive Officer, Dingiswayo Jere, said Escom only managed to meet about 75 percent of the targets Mera set, hence the energy regulator could only allow the sole power producer to effect a 13.5 percent instead of the 18.39 percent hike.
“Mera will continue to monitor Escom’s performance on the agreed performance indicators to ensure continued improved performance by Escom and that electricity consumers get value for money,” said Jere.
Last year, Mera granted Escom a 37.28 percent tariff hike to be implemented gradually over the three-year period until 2017.
According to Mera, during the review period, the board observed that the impact of the depreciation of the kwacha and the rising inflation has eroded the value of the current average electricity tariff.
The 13.5 percent tariff increase has been implemented in the first year of the tariff hike rollout which will follow subsequent hikes scheduled for 1st July 2016 and 1stJuly in 2017.
Commenting on the issue, Consumer Association of Malawi (Cama) Executive Director, John Kapito, described the tariff increase as shocking coming at a time when the issues they raised when Escom submitted its application for a tariff hike have not been addressed.
Kapito said Escom has failed to meet all the key performance indicators that were agreed with Mera on behalf of the public.
“They are trying to increase tariffs on a product that does not exist….Are you simply going to raise money on a product that does not exist? Are you going to raise money for not providing the public services?
“Escom is being rewarded for something which it is failing to do. I find this approach as an insult and I find this approach by both Mera and Escom to be very [unfortunate] because it undermines what we consumers are going through to get electricity,” said Kapito.
He, therefore, warned of unspecified action if Mera does not reverse its decision.
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