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Escom tariffs up again

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Barely a month after announcing a 13.5 percent hike in electricity tariffs, the Malawi Energy Regulatory Authority (Mera) Wednesday issued a statement announcing another 13.7percent increase which will force consumers to dig deeper into their pockets with effect from January 1 2016.

The announcement which was made in a Mera statement signed by its board chairperson Dingiswayo Jere, dated December 22 states that following the board’s role stipulated in Section 9 of the Energy Regulation Act, resolved that the Electricity Supply Corporat ion of Malawi (Escom) electricity tariffs be increased from an average of K40.69/kWh to K53.69/ kWh (or US$0.08 per KWh).

Jere says this is in keeping with promoting the interests of consumers of energy with  respect to energy prices and charges and the continuity and quality of energy supplies as stipulated in the section.

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The Mera Board Chair explains that based on Escom’s performance in the 2014/2015 fiscal year, it has granted the utility a 13.73 percent tariff increase as the second tranche of the base tariff with effect from November 2, 2015.

“This increased the average tariff from 35.69 per kilowatt hour (kWh) to K40.69/kWh,” says Jere, adding that this adjustment also took into account the impact of movements in the macro-economic fundamentals of exchange rate and inflation up to June 30, 2015.

The Mera board, therefore, agreed to grant Escom a 24 percent ATAF-based tariff increase, which moved the tariff to K50.33 per kWh.

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The board, however, resolved that the implementation of that increase be delayed for a few months in order to cushion consumers from its impact.

On December 2 2015, states the statement, the Mera noted that the kwacha had further depreciated to K612.38 to the United States dollar and inflation rate went up to 24.7 percent in October 2015.

“The Mera Board noted that the impact of both inflation and exchange rate movement resulted in a 6.67 percent increase in the tariff which was beyond the statutory ± five percent (±5%) threshold for revising tariffs and therefore the electricity tariff qualified for an upward adjustment,” said Jere in the statement.

Soon after last month’s hike Consumers’ Association of Malawi Executive Director, John Kapito described the tariffs increase as shocking coming at a time when there were unresolved issues based on consumer complaints against Escom’s performance.

“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?” Kapito had argued.

He had also said Escom is being rewarded on something which is failing to do and he found the approach as an insult.

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