Power Market Limited wanted K1 billion monthly from tariffs
The Electricity Supply Corporation of Malawi (Escom) has revealed that Power Market Limited (PML) has been getting K2.80 per kilowatt hour (kWh), or K80 million weekly, from power tariffs, translating to about K320 million per month.
Escom said PML now wants to be getting K8.80 per kWh, translating to K1 billion per month.
Escom Chief Executive Officer (CEO) Kamkwamba Kumwenda said on Saturday that this is contained in the proposed 99 percent tariff adjustment, in which PML wants to be getting K250 million every week.
He disclosed this in Mponela, Dowa District, on Saturday on the sidelines of Escom Staff Union 5th Quadrennial Congress.
Kumwenda and Minister of Energy Ibrahim Matola have since expressed hope that the elimination of PML would ease pressure on the end user tariff.
“This is not a secret. What happens is that the end user tariff includes tariffs to run the licencees. On a weekly basis, we transfer money electronically to these licencees, one of them being the single buyer.
“As we speak now, before the tariff review, we transfer about K80 million on weekly basis to PML… In the tariff adjustment we have applied for, they [PML] wanted to be getting K8.80 [kWh], meaning that we were supposed to be giving them K250 million in a week from the K80 million,” he said.
But due to the removal of PML, the proposed tariff hike would most likely be reviewed and reduced.
He argued that under the 2016 amended Electricity Act, a Single Buyer licencee is under the corporation but that, during the existence of PML, Escom has been subjected to higher tariffs that were agreed without Escom involvement.
“Yet it is us, Escom, who are going to collect that money. So, if agreed, high tariffs affect us, as Escom,” he said.
Asked about progress of the transition, he said the government has set up a transition committee that the Escom CEO is part of.
On his part, Matola said even though there has been pressure because of the decision to dissolve PML, the government would not bow down to pressure because the decision is for the goodof electricity users.
“We are just trying to reverse the decision that was made in 2018. I would like to urge employees of PML to work [with us] during the transition period,” Matola.
Matola said the existence of the company has been resulting in higher electricity tariffs because the money collected was being shared among Escom, PML, Electricity Generation Company and Malawi Energy Regulatory Authority (Mera).
PML officials referred us to Mera.
When asked for a comment on Escom’s claim that PML wanted K1 billion a month, Mera spokesperson Fitina Khonje asked for ample time.
In December last year, the government dissolved and transferred the Single Buyer licence to Escom.
In a letter that Times Business saw, signed by Secretary to the Treasury Macdonald Mafuta Mwale and dated December 22 2022, the government says there is a need to manage the transition in an orderly manner.
The letter, which is addressed to the Secretary for Energy, Solicitor General and Comptroller of Statutory Corporations, indicated that the three had been appointed into the transitional committee to manage the dissolution of PML and manage the transitional process.
According to the letter, chairperson for the committee is the director of administration in the Ministry of Energy.
“The committee will formulate its terms of reference. Please be advised that the appointment is with effect from December 12 2022,” the letter reads.
Commenting on the development, Attorney General Thabo Chakaka Nyirenda recently said owners of companies are free to dissolve companies, provided that solvency requirements are met. He said a company can be voluntarily wound up only if it is solvent.
“My office gave legal advice on whether it was legally possible to transfer the single buyer licence from Escom to PML. My answer was affirmative.
“And if the owners of the companies decide to dissolve the company, there is nothing wrong with it,” Chakaka Nyirenda said.
Times Business has learnt that about 15 employees of PML will lose their jobs through this transition.
PML is a public company that was incorporated on June 25 2018 under the Companies Act (Cap. 46:03 of the Laws of Malawi).
The establishment of PML was premised on government’s pursuit for an independent and creditworthy entity that instills confidence in investors.
The power market structure in Malawi was vertically integrated, with Escom as a sole utility monopolising generation, transmission and distribution, and performing all system operations.
In another development, during the Escom Staff Union elections that took place n Mponela on Saturday, Charity Harawa and Alex Chatsira were elected president and vice president, respectively.
Mathews Kasanda is a journalist who holds a Bachelor of Arts in Journalism from University of Malawi (The Polytechnic).
In 2015, Media Institute of Southern Africa awarded him the Best Print Media Education Journalist of the Year accolade.
He joined Times Group Newsroom in September 2019.