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Escom revises tariff structure

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By William Kumwembe:

Electricity Supply Corporation of Malawi (Escom) has revised its base tariff structure following a 31.8 percent electricity tariff adjustment nod by Malawi Energy Regulatory Authority (Mera).

Escom applied for a 60 percent electricity tariff adjustment.

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Escom has since introduced a life-line tariff in the new structure to cater for low income households to access electricity at lower rates, while reducing the subsidy for other sections of the consumers.

Among other things, the new tariff plan stipulates that consumers from other categories would be buying the first 50 electricity units at a base rate of K48.80 per unit.

Any additional unit after the first 50 units mark would see the domestic prepaid consumer buying electricity at K67.25 per unit, representing 38 percent difference.

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In a presentation to journalists, Escom Senior Commercial and Customer Service Manager, Wiseman Kabwazi, said the changes were part of the Escom proposal approved by Mera.

He said Escom has effected minimum increase to small non-domestic power users since existing tariff were already on the higher side.

Currently, domestic electricity sales account for 38 percent of energy sales and 28 percent of revenue.

The domestic tariff is at 33 percent below average tariff.

“Domestic customers [have been] massively subsidised by non-domestic customers. This is un-sustainable for non-domestic customers. The domestic average tariff will still be lower than average tariff and will still benefit from cross subsidies from non-domestic customers,” Kabwazi said.

Escom Chief Executive Officer, Allexon Chiwaya, said last week the change is reflecting market trends.

“This would benefit the consumer as the tariffs would entail lower costs for customers with low consumption,” Chiwaya said.

He said Escom’s target is to reach out to over 30 percent of the population with electricity.

Currently, only 1.2 percent of the population has access to electricity.

Escom has been sailing through troubled waters in recent months due to, among other things, bad procurement decisions which resulted in the firm buying equipment it does not currently need.

Mid this year, Escom asked the Treasury for a K50 billion bailout package to keep its operations afloat, a development the fiscal authorities turned down.

This left Escom with no option but to turn to the money market.

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