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‘Malawi needs more investment in power sector’

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United States Ambassador to Malawi, Virginia Palmer, has said Malawi needs heavy investment in the energy sector to address the problem of power woes that have crippled the economy.

Palmer was commenting on the impact of the $350.7 million five-year Millennium Challenge Compact (MCC), which is being funded by her government, on Malawi’s energy sector. The compact expires in September 2018.

The compact has facilitated the installation of transmission lines that could help the country attract more investment in power generation.

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However, Palmer said Malawi should take more measures aimed at reforming the power sector.

“Right now, all the electricity that is being produced is being sold for less than it costs to make it and Escom [Electricity Supply Corporation of Malawi] is losing money.

“And if Escom is losing money, private investors would not come and build power plants to sell power to Escom. So, we need a cost-reflective tariff and that is something very important. I hope [this] will happen very soon,” said Palmer.

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She said, while the component of infrastructure construction, was going very well under the compact, there has been a slow pace in face-lifting the power sector reforms.

“I think Escom’s financial stability would be critical to attracting IPPP. I think Escom has some major debts— both to Egenco and for past procurements— and that is one thing the government has to tackle,” she said.

Meanwhile, Palmer has hinted on the possibility of Malawi getting a second compact, either in water, girl-child education or in more power investment if it does well on the score card.

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