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United States concerned with Power Purchase Agreement delays

The United States has asked the Malawi government to act with speed in addressing Power Purchase Agreement (PPA) issues that have, for years, deterred Independent Power Producers (IPPs) from entering the market.

US Ambassador to Malawi, Virginia Palmer, said Malawi should be able to pay what it takes to produce the needed electricity if power outages are to become a thing of the past in the country.

She said this during the seventh Semi-Annual Review Forum for the Millennium Challenge Compact that took place in Lilongwe.

Palmer said, while some progress has been made, the US would consider the project successful when they see the private sector investing in power generation to render the transmission grid that has been constructed under the project useful.

“One of the things that are outstanding is the incorporation of private sector investment into power generation because we have built the transmission grid to allow private investors, both from Malawi and foreign [ones], to come and produce the power.

“However, these private investors need to be sure that Escom [Electricity Supply Corporation of Malawi] is financially sound as [a] buyer of electricity and, for that to happen, you need a cost reflective tariff. Right now, Malawians are paying less than what it takes to produce power,” Palmer said.

She added that most Malawians would be eager to pay more and have electricity all year round, as opposed to the current situation.

While not wanting to divulge much details on developments on PPA, Minister of Natural Resources, Energy and Mining, Aggrey Masi, said that progress is being made and Malawians should understand that, once the compact is completed, IPPs would feed the transmission grid with the much needed electric power.

“There is quite a lot happening; there are solar projects, the Kammwamba project and the interconnector project. We are working on the compact, the rest will come in concurrently with the MCC,” Masi said.

He further said the government is working on short-term measures to address power challenges the nation is facing, citing the installation of diesel generators across the country.

“In November, we plan to install a diesel generator in Mzuzu then, early next year, we will come to Salima and other parts of the Central Region before proceeding to the Southern Region,” Masi said.

The development comes when IPPs are failing to start their operations in the country following disagreements over power charges. The government argues that most Malawians cannot afford to pay the rates being proposed by IPPs.

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