‘Proposed 60% Escom power hike will hurt economy’

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By Taonga Sabola

[dropcap]I[/dropcap]f you are using K20 000 on electricity, the proposed 53 percent hike would see you spending above K30 000 from September this year, says Malawi Confederation of Chambers of Commerce and Industry (MCCCI).


MCCCI Chief Executive Officer, Chancellor Kaferapanjira, warned that the proposed 60 percent tariff hike by Electricity Supply Corporation of Malawi (Escom) over the next five years will crash the economy.

Among others, Escom proposes a tariff increase of 53 percent in the first year of operation from September this year, six months after the power company increased by 25 percent to help pay for the leased gensets.

The gensets were leased to help ease electricity blackouts which brought industry to its knees.


He said such a huge increase would significantly raise cost of living for the poorest of the poor.

“What this simply means is that if you are using K20 000 on power, the 53 percent hike would see you spending above K30 000 from September, which is too much,” Kaferapanjira said.

The industry chief said the development would leave industry with no options but to induce a sudden jump in commodity prices.

“And if industry decides to pass on to the consumer the impact of the increased cost of operation would be disastrous,” Kaferapanjira said.

He said looking the proposal, the significant jump in the first year is coming in because of some inefficiencies such as government debt.

“Other things they are talking about include raising salaries as well as buying a new fleet of vehicles as they argue that the current fleet is old. We believe some of these things can be delayed,” Kaferapanjira said.

The Chamber proposed a tariff increase of 12 cents per kilowatt hour could be ideal as opposed to the 15 cents per kilowatt hour Escom is proposing.

Consumers Association of Malawi (Cama) Executive Director, John Kapito, described the proposed tariff hike as unfortunate.

Kapito said it is unthinkable for people to be discussing raising the price of a product which is not available on the market.

He argued that it would have been better for Escom to make power available first before deciding to raise its tariff.

“Where is the electricity? Malawians are crying foul every day that they don’t have power. So do we want to raise the price of darkness? Kapito Queried.

He added that increasing by allowing Escom to increase energy tariffs; it would help fuel corruption at the institution.

Kapito said the problem with Escom is not a shortage of financial resources but abuse which has resulted in the power distributor buying equipment it does not need.

“We don’t want to kill the people at Escom quickly by fattening them with our money. A tariff hike will only promote theft at Escom,” Kapito said.

Escom Chief Executive Officer, Allexon Chiwaya, said the tariff hike would help his firm to meet the charges levied by power producers.

Chiwaya added that the increased revenue from the tariff hike would boost his firm’s efficiency and capacity to provide Malawians with reliable power.

Mera Chief Executive Officer, Collins Magalasi, said they expect the Mera board to come up with the verdict on the matter by August 30.

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