Electricity Supply Corporation of Malawi (Escom) is again caught in some suspicious dealings in the procurement of generators meant to ease the country’s energy crisis.
Escom changed chiefs executive officers recently with Alexon Chiwaya replacing Evelyn Mwapasa in a move many thought was meant to find a solution to the power outages that has hit the nation hard.
But the move has only brought fresh controversy at the parastatal as the new management has awarded a contract to supply generators to Aggreko Power Solutions, a company whose contract was cancelled by the Office of the Director of Public Procurement (ODPP).
ODPP cancelled Aggreko Power Solutions’ $74 million contract on grounds that the company had an unfair advantage over other bidders
The South African-based firm had won the contract after it took part in a restricted tender early this year. But an investigation by the ODPP found that the process was manipulated to give Aggreko the unfair advantage and the ODPP halted the whole process and subsequently stopped Escom from signing the contract.
But Chiwaya disregarded the ODPP’s findings and quietly gave Aggreko the contract back to supply the generators even before the Malawi Energy Regulatory Authority (Mera) endorsed the Power Purchase Agreement (PPA) as mandated by law.
The suspicion is not only about why Chiwaya decided to bring back a company that government had dismissed, rather, what has stunned Mera Board, we understand, are the details contained in the two-year agreement Escom signed with Aggreko.
The agreement, which we have reviewed, raises a lot of questions about why Escom should agree to buy fuel for the generators from the National Oil Company (Nocma). It also raises suspicions why Escom is asking for a tariff hike of 0.59 cents per Khw when it buys electricity from Energy Generation Company at 0.03 cents per Khw.
Six days after being appointed as Escom boss, Chiwaya wrote Mera informing the energy regulatory authority about the PPA arrangement they negotiated with Aggreko Power Solutions to install the standby generators at Lilongwe’s Kanengo and Blantyre’s Chichiri substations.
In the agreement, Aggreko is supposed to commission the first generator on December 24 and another one on December 31, this year.
Escom agrees in the contract to be responsible for the provision of fuel to the sites, another issue that shocked the Mera Board, when they met last week and refused to endorse the agreement
The Mera Board questioned why Escom should be involved in the procurement of generators when it is not their mandate, why Escom should sign an agreement with Nocma when Aggreko is supposed to enter into such an arrangement with fuel suppliers and, finally, why Escom should buy electricity from Aggreko at 0.12 cents per Kwh for two years.
Under t h e same PPA arrangement, Escom is supposed to pay for the cost of shipping of the generators.
Our inside source at Escom said Escom’s manoeuvres are meant to rip off taxpayers’ money.
“The arrangement for Escom to enter into a fuel contract with Nocma to supply diesel to Aggreko is a move to use Nocma as a conduit to syphon money using over-priced fuel arrangements.
“Escom has no money to directly pay for the fuel, however, Nocma has access to billions of kwacha that Mera keeps under the fuel stabilisation fund. Aggreko is supposed to procure fuel from the companies under PIL [Petroleum Importers Limited],” said the insider.
Chiwaya’s phone was off last evening when The Daily Times wanted to have his comment.
Currently, Malawi’s installed electricity capacity is 282.5 MW compared to estimated demand of 344 MW, and only nine percent of the 17 million population has access to electricity with many relying on firewood and charcoal for energy.
But in recent months, power outages have gotten worse with most households going without electricity for more than 20 hours.
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