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Logistical challenges impede Power Market Limited’s efforts

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By Jameson Chauluka

Despite getting billions of Kwacha from the power sector for the past 19 months, government-owned Power Market Limited (PML) is yet to start discharging its duties of purchasing and selling power as a single buyer due to logistical challenges it is reportedly facing with another government-owned company, Electricity Supply Corporation of Malawi (Escom).

PML was created out of Escom to be the only company to be purchasing and selling power, which is referred to as a single buyer function, leaving Escom with electricity distribution, transmission and system operator licences only.

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The Daily Times understands that PML has been getting an average of K320 million every month as single buyer fees for its operations since June 2020, which translates to about K6 billion now.

However, others that are linked to Escom’s licences of distribution, transmission and system market operations are yet to sign service level agreements with PML.

The agreements will then operationalise a Settlement Account domiciled at the Reserve Bank of Malawi to keep the money paid by electricity users before it is shared among all players including Escom.

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Speaking at a media orientation workshop in Mangochi District recently, PML Director of Marketing and Corporate Services Villant Jana said the company was also finding it hard to sign agreements with new independent power producers (IPPs), saying they could not commit to pay them since they are not in control of the purse as provided for in the laws of Malawi.

“The Settlement Account at the Reserve Bank of Malawi is ring-fenced. It is owned by the Malawi Government and we are its administrators. What will happen is that the money from electricity users will be going directly into this account and no player will have access to the funds until every claim is settled.

“At the end of the month, PML will, as an administrator, be looking at invoices from power producers and other players in the sector and then sharing the money accordingly,” she said.

The new power structure was devised to make the power market more competitive and attractive to IPPs unlike the current system where Escom handles the money from users of its services as its own and makes decisions on who to pay, how much and when.

The current structure is, to an extent, blamed on huge debts Escom owes power producers including Electricity Generation Company of Malawi, making the country’s power sector not viable for private investors.

PML was created as part of a power sector reform project under the $350.7 million (K242 billion) five-year Millennium Challenge Corporation energy compact that aimed at improving power generation, transmission and distribution infrastructure in the country.

Escom, which is fighting against the removal of the Single Buyer Function, contends that reasons advanced for removal of Single Buyer Function from Escom to PML are not consistent with the reality.

A position paper of Escom, dated November 5 2021, says placement of Single Buyer Function within Escom was appropriate, as there are linkages with the other three licenced functions of distribution, transmission and system and market operations.

Spokesperson for the Ministry of Energy, which is the parent ministry of both Escom and PML, Upile Kamoto said the issue was being handled at a high level.

“The ministry is well aware of this issue and [is] looking into it at [a] high level,” she said.

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