Malawi Energy Regulatory Authority (Mera) has described as ‘misconception’ that electricity prices could be lower if Agrekko Power Solutions is relieved from the contract of supplying energy, as suggested by Parliamentary Committee on Natural Resources and Climate Change.
The committee suggested that the contract be awarded to Electricity Generation Company (Egenco), a local power generating company which has proved that it can execute power generation responsibilities like Agrekko does.
At a meeting in Lilongwe on Tuesday, the committee’s chairperson, Werani Chilenga, argued that Aggreko is charging exorbitant prices which have seen Electricity Supply Corporation of Malawi (Escom) draining from its coffers over K675 million per month in power purchase deals.
The amount also translates to a payout of over K7 billion by Escom to Aggreko annually.
But Mera Chief Executive Officer, Collings Magalasi, said the committee’s recommendations were misconceptions, as pricing of electricity is based on cost of production.
Magalasi was speaking when four ministers who are in Cabinet committee on energy overseeing the implementation of projects in the energy sector, visited Wovwe Hydroelectric Plant in Karonga District yesterday.
“Let me state that pricing of electricity will not be cheaper because the generators are being run by Egenco, no. The price will be same in fact the price will be more expensive. Why? Because all the pricing of electricity in this country is done on what is called cost-based,” he said.
But Natural Resources, Energy and Mining Minister, Bintony Kutsaira hailed the committee for its recommendation.
“It’s a nice recommendation but, first, we must make sure that Egenco has enough resources and equipment. They have diesel engines in Mapanga and Mzuzu and now they need to increase their capacity. I agree with the parliamentary committee but, in the meantime, let us have expensive electricity that is available than to have none,” Katsaira said.
Transport and Public Works Minister, Ralph Jooma, who is a member of Cabinet committee, said the committee was impressed with the upgrading of Wovwe Hydroelectric Plant from 4.5 to 9 megawatts.