Panic as power outages choke production in Malawi

Panic as power outages choke production in Malawi

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MALAWI is going through a drastic load shedding programme of electricity rationing following a loss of 20 megawatts (MW) due to low water levels in Lake Malawi and the Shire River on which three hydro power stations are constructed.

Malawi’s power utility companies – the Electricity Generation Company (Egenco) and the Electricity Supply Corporation of Malawi – are now planning to procure diesel generators to ease power woes that have stalled production lines.

On average Malawi needs up to 351 MW of electricity produced by three stations on the Shire River namely Nkula, Tedzani and Kapichira. Over the years power generation has been affected due to low water levels in Lake Malawi and its outlet the Shire River.

Currently Egenco is generating 160MW and of this between 60MW and 70MW is reserved for critical centres such as hospitals. Egenco chief executive officer William Liabunya said the erratic power generation has compelled the company to purchase diesel generators.

While admitting that diesel generation of power is expensive, Liabunya said: ‘We are in a very desperate situation. We have little choice but to come up with a solution in this alarming situation.’

Egenco plans to add 36MW by March 2018. To improve the situation, government has secured $250 million from the World Bank for a 300MW hydro-electric power project, $70 million for a solar energy plant, and $30 million for the interconnection with Mozambique. Also in pipeline is the 300MW coal-fired project in southern Malawi.

In 2007 the World Bank approved a $93 million credit for the construction of a power link between Malawi and Mozambique. The agreement collapsed when Parliament refused to approve the Loan Authorisation Bill in 2009 on cost benefit grounds.

Business captains concerned

Economic Association of Malawi (Ecama) warns that the extended load shedding is putting the economy under stress, urging the authorities to act fast to reverse the negative impact on businesses. In some instances industries are getting two hours of power supply a day forcing them to reduce manufacturing.

Ecama president Henry Kachaje said the electricity woes are impacting the industries, compelling them to drastically reduce production and in some instances cease production.

‘Power is critical and central to our economic development and the current outages are going to negatively affect the private sector, specifically the manufacturing sector. We have already started experiencing cement shortages. This is going to have a negative impact in terms of how we can progress and grow,’ Kachaje said.

Most industries are incurring high production costs as they have to buy diesel for gensets resulting in low profits and job cuts.

A group of Civil Society Organisations (CSOs) and concerned citizens on November 8 marched in the capital Lilongwe and presented a five-point petition to Escom demanding an explanation and an end to power outages.

In the five-point petition, the concerned citizens want an end to blackouts. They are also demanding that President Peter Mutharika should address the nation on the power outages, that Parliament should summon Escom and Egenco officials to account for their actions and that a forensic audit should be conducted at the two companies.

NICO Asset Managers, an investment management firm, says unreliable power supply poses major risks to the country’s economic growth. In an economic brief, NICO Asset Managers warned that the energy situation could limit investments into Malawi.

‘Insufficient power supply may hamper economic activity in the country. Power shortages may limit investment if alternative methods of power are not implemented,’ it said.

The power outages have adversely choked the private sector operations. President Mutharika recently made a surprise visit to Escom amd Egenco offices in downtown Blantyre and made an assurance that power outages would ease by December this year.

 

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