By Wezzie Gausi:
JCM Power has reported the Malawi Government to an international risk management company over its failure to pay for solar power produced by the company in Salima District and Golomoti, Dedza District, and the company is demanding $2.4 million (K2.4 billion).
In a letter, dated August 1 2022, from the African Trade Insurance Agency (ATI)—a pan-African institution that provides risk solutions to companies, investors and lenders interested in doing business in Africa—signed by Chief Executive Officer Manuel Moses to the Treasury, Ministry of Energy and all players in the energy sector, JCM notified ATI of the overdue payments amounting to about $1,987,517 and $430,197 under the Salima and Golomoti Power Purchase agreements, respectively.
The letter further warns the government that delays in settling the overdue amounts could trigger a claim on ATI, consequences of which are dire.
“As required by the MoU [Memorandum of Understanding], ATI is under the obligation to inform the government of any event that could trigger a claim under the ATI policy and the government is under the obligation to take all actions to resolve the problem before the situation deteriorates to the extent that ATI has to pay a claim.
“We, therefore, wish to draw your attention to payment delays reported under the PPAs. JCM has notified us of overdue payments amounting to about $1,987,517 and $430,197 under the Salima and Golomoti PPAs, respectively. We are cognizant that the government has made some part payments towards offsetting overdue invoices under the PPAs. As such, we commend the government for this action. However, delays in settling the remaining overdue amounts could trigger a claim on ATI, consequences of which are dire,” the letter reads.
“JCM has indicated their intention to claim the dues, under ATI facility, if the overdue amounts are not settled within the next three weeks. We are, however, confident that the government shall move swiftly to cause Escom [Electricity Supply Corporation of Malawi] to honour these ATI-insured obligations by making full payment of the overdue amounts in no time,” the letter reads.
Escom Chief Executive Officer Kamkwamba Kumwenda said they are supposed to pay JCM within 45 days.
He said Escom had received invoices from JCM but has to scrutinise the documents before making payments.
“We accept there have been delays in paying the company but this is a two-way problem. Sometimes we are charged more than what we received; so, we need to verify first and that process takes time.
“But in this case we know the due payments are the ones that were made in May but unfortunately the company included invoices for June which will mature this August. So we cannot pay that, but we are paying for the ones that already matured,” Kumwenda said.
Secretary to the Treasury Mcdonald Mafuta Mwale said he could not comment on the matter as he had not seen the letter.
“I need to be given time to see the letter. I was outside Malawi on official duties and just arrived on Saturday. So, I am not sure if the letter really reached my office,” Mwale said.
Power Market Limited spokesperson Villant Jana said she was not at liberty to comment on the matter.
Parliamentary Committee on Natural Resources and Climate Change Chairperson Werani Chilenga called for a quick resolution of the matter.