Truth behind blackouts

Tom Sangala October 5, 2017

419 2 minutes read

The real reason Malawians are experiencing constant power blackouts is failure on the part of Electricity Supply Corporation of Malawi (Escom), which misunderstood its mandate and delayed to procure the 78 megawatts diesel generators required from this month when the country’s hydropower plants are at their lowest.

It transpired that Escom awarded a tender to a company and ended up seeking clarification afterwards whether it made the right decision or not.

Leaked correspondence between Escom and the Office of Director of Public Procurement (ODPP) and interviews The Daily Times conducted revealed that the power utility firm decided to advertise for the procurement of emergency generators when they had no mandate to do so. This led to the cancellation of the bid two months before the crucial month of October when the generators were needed most.

In April of this year, a $74 million contract was awarded to Aggreko, a South African-based company to lease the generators.

The Director of Public Procurement gave a ‘No Objection Order’ on April 25 2017 to Escom to go ahead but trouble surfaced when Escom Chief Executive Officer Evelyn Mwapasa wrote the ODPP on August 7 2017 seeking clarification on several issues before she could go ahead with the Aggreko deal. This was five months after the ODPP gave Escom the green light to procure the generators and two months before October when the generators were badly needed.

“Speed is of the essence in this procurement because the emergency power being procured is required from October 2017 when the country’s hydropower plants are at their lowest production capacity due to lower water flows in the Shire River,”’ reads Mwapasa’s letter in part revealing the panic that had ensued.

Mwapasa informed the ODPP that because of a 25 percent proposed tariff hike to finance the procurement of the gensets, the Escom board had resolved that the contract with Aggreko should not be signed “until approval of the required tariff increase and waiver of levies duties and taxes has been received.”

She also asked for guidance on a complaint from two bidders, identified as ASKA and Altaqaa, who wrote the Eacom board seeking redress. In response, the ODPP went ahead and cancelled the tender after noticing “irregularities” in the award to Aggreko

“The No Objection that was granted to Escom was withdrawn and the process cancelled after it was noted that there were some technical anomalies during the procurement process,” ODPP Paul Taulo said in an emailed response yesterday.

He said that Electricity Generation Company (Egenco) was given the powers to procure the emergency generators because that this is the new entity responsible for power generation and not Escom anymore.

The leaked correspondence also reveals how Escom intended to pass on the cost of the generators to consumers through a 25 percent tariff hike.

“The costs of this transaction are intended to be funded by an electricity tariff increase of around 25 percent on top of a waiver of levies, duties and taxes,” Mwapasa explained in a letter to the Director for Public Procurement dated August 7 2017.

Mwapasa yesterday asked our reporter to speak with the corporation’s Public Relations Manager Kitty Chingota as she was on the road driving. When we contacted Chingota, she asked for a questionnaire via email which we did.

We had no response as we went to press Wednesday.

The delays and the final verdict to cancel the process effectively meant that the acute electricity crisis, with rolling blackouts – or load shedding, continue to not only affect businesses but also endanger the lives of patients in hospitals, affect livelihoods whose cost of living keeps on going up.

Nico Asset Managers in their July 2017 economic brief feared that continued power outages would limit investments and forecast the impact on economic growth which they had pegged at 4.5 percent this year.

Currently, Malawi’s installed electricity capacity is 282.5 MW compared to estimated demand of 344 MW, and only nine percent of the 16 million population has access to electricity with many relying on firewood and charcoal for energy.

To help improve the erratic power supply, in 2011, the US government’s Millennium Challenge Corporation gave Malawi a $350 million grant to overhaul its energy sector.