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Independent Power Producers cry foul over Procurement

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Independent Power Producers (IPPs) have poured out their frustrations in the renewable energy procurement process, blaming Escom and Ministry of Natural Resources, Energy and Mining for fixing the process.

They have since written President Peter Mutharika, Vice President Saulos Chilima, the International Monitory Fund (IMF), the World Bank, Millennium Challenge Account (MCA) and Escom and the ministry itself informing them of alleged corruption in awarding of contracts to two companies without following procedures.

The IPPs suspect that Escom and the ministry have connived to manipulate the renewable energy procurement process despite the fact that Mott MacDonald was consulted to conduct IPPs procurement.

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The IPPs have called for the establishment of an independent procurement agency if Malawi is to afford cheap energy from renewable energy like in other countries.

They say it is strange that some people in Escom helped IPPs to inflate tariffs in exchange for cash up front.

An email with a subject line ‘Malawi Renewable Energy Procurement Process – anomalies’ which Malawi News has seen says in August, Mott MacDonald Consultants told the IPPs to wait for a written communication from the ministry to those who qualified to bid after being selected.

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But on October 10 2016, during Malawi Investment Forum meeting, Escom chief executive officer and the ministry jointly announced that Escom was at an advanced stage negotiating Power Purchase Agreement (PPA) with two IPP firms.

Atlas Energy was recently quoted in the media indicating that it is currently negotiating with Millennium Challenge Corporation ad Power Africa Transactional Advisor on their impending PPA with Escom.

The frustrated IPPs believe that they were deliberately misled into believing that the process was under way and Escom was finalising the bidding documents.

“This glaring anomaly is detrimental to the standing of Malawi Government in the eyes of international investment community and multilateral financial institutions. Risk assessment is a perception. In businesses where big monies are involved, such a perception is a reality,” said Project Development Executive for Tugeta Consurtia De Energisa, Thom Shrimpton in an email conversation with his fellow IPPs.

Another irritated IPP, Justin Wesley said Escom’s revelations generated so much interest and anxiety at the investment forum meeting.

“…and I recall that a gentleman from a company called Ulalo asked the CEO to clarify his assertions because his company like most of us was waiting to hear from the ministry based on Mott MacDonald’s letter to all of us. The CEO was clearly uncomfortable to elaborate or to answer the questions that followed,” he said.

Wesley said some people within Escom and the ministry had staged this and had already known who they were going to give the projects.

“These are hallmarks of fixed offers. It is unfortunate that so many companies wasted resources, chasing a fixed process,” he lamented.

Wesley revealed that Escom has been very elusive with information and communication.

“They never responded to questions regarding basic information about the projects. Experience tells us that unexplained silence always means something fishy is being cooked.

“If Malawi is to kick-start renewable energy programme with this kind of selection process, it makes the whole thing a laughing stock. No IPP of integrity would be interested in a dubious procurement regime,” he said.

Another frustrated IPP, Maurin Mandrel said her company received information that alleges that one company publicly boasted in the media how they were being assisted by Millennium Challenge Technical teams to negotiate Power Purchase Agreement with Escom.

“…how the embassy of another country was directly involved pressurising Malawi government to award the contracts to these companies. How one of these companies had changed its tariff several times… These changes were with the help of some officials in the ministry and senior employees in Escom, “she said.

Mandrel also alleged that bribes exchanged hands to make sure other IPPs were deliberately frustrated, misled or kept in the dark.

“I agree with you Justin, and Mr Shrimpton that this process has been more damaging to Mott MacDonald, the Ministry and Escom. This is a shame to a country struggling with power cuts. Few corrupt officials hijacked the process,” she said.

Spokesperson for Department of Energy in the ministry Joseph Kalowekamo said the ministry does not have updated information on the issue of IPPs.

“We need more time to respond to your questions as we have not received any update recently,” he said.

Public relations officer for Escom, George Mituka, had not responded to our questions as we went to press.

Twenty-seven IPPs signed a Memorandum of Understanding with government and are awaiting PPAs with Escom to roll out their projects. There is a $300 million for the solar investment in offing.

Malawi is experiencing prolonged blackouts which in some cases last for up to 30 hours in some parts of the country.

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