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Escom challenges K4.4 billion payment to Aggreko

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The Electricity Supply Corporation of Malawi (Escom) has said it is not ready to pay $4.3 million (about K4.4 billion) it owes Aggreko.

Aggreko started operating in Malawi in 2018 and used to pump into the national grid 75 megawatts of electricity produced from its diesel-powered generators until the contract was terminated earlier this year.

In an interview, Escom Chief Executive Officer Kamkwamba Kumwenda said Aggreko did not account for fuel amounting to $4.3 million and that, until this matter is resolved, the corporation will not pay the balance of a similar amount for energy sold to the utility company.

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Kumwenda said Escom has made a claim through its lawyers.

“We have made the claim to them using our local lawyers. The matter is still at mediation stage.

“Unfortunately, if we have to go to full trial, the jurisdiction is Mauritius. Hopefully, the matter will not go that far. The deal with Aggreko was poorly negotiated,” Kumwenda said.

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Parliamentary Committee on Natural Resources Chairperson Werani Chilenga said it is paradoxical that, “while Escom is refusing to pay Agrekko, Malawians are up to now still paying for the Agrekko tariff, which is about K400/kwh [per kilowatt per hour]”.

A 2019 audit report for Escom shows that power which the corporation was buying from Aggreko was too expensive, as it was pegged at an average of K216 per kwh compared with Egenco’s hydro generated power, which costs K31.8 per kwh.

The audit also noted that the purchasing cost of Aggreko’s power, at K216 per kwh, was even more expensive than Escom’s electricity selling price of K92.78 per kwh, as at June 30 2019.

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