ELECTRICITY SUPPLY CORPORATION OF MALAWI

The Electricity Supply Corporation of Malawi (ESCOM) is a Limited Liability Company established under the Companies Act of 1984 and its mandate is to procure, transmit, distribute and retail electricity in the country.

In order to efficiently execute its mandate, ESCOM undertook a number of reforms as part of the Malawi Public Sector Reforms Programme that was launched by His Excellency President Professor Arthur Peter Mutharika in 2015.

ESCOM is undertaking the following reforms:

Unbundling of ESCOM

This reform was undertaken to allow Private Sector Participation in the Electricity Industry in the country by restructuring ESCOM into two independent companies namely: Electricity Supply Corporation of Malawi (ESCOM) and Electricity Generation Company of Malawi (EGENCO), respectively.  

The unbundling resulted into ESCOM having two functions of operating as a System and Market Operator (SMO) and a Single Buyer (SB) whilst EGENCO on the other hand assumed the function of an independent electricity generation company.

Following the reform, a Memorandum of Understanding (MOU) was signed between ESCOM and EGENCO to guide implementation of various activities as outlined in a Schedule of Arrangements (SOA) covering elements of human resources, legal, finance and ICT Systems Operations among others.

The reform also saw EGENCO being incorporated under the Companies Act of the Laws of Malawi on 7^th September 2016 and started operating as a separate company effective 1^st January 2017.

Through the reform, several Independent Power Producers (IPPs) expressed profound interest to invest in the energy market and the Corporation signed power purchase Agreements with several IPPS. The IPPs include Mulanje Hydro (hydro generation on Ruo and Ndiza Rivers in Mulanje District), JCM Matswani (solar power generation at Nanjokain Salima and Golomoti in Dedza), Phanes (solar power).

ESCOM also signed agreements with Electricidade de Mocambique to import 50 Mega Watts (MW) from Mozambique as well as importing another fifty (50) MW from Zambia through an arrangement with ZESCO. ZESCO is also selling ESCOM another twenty (20) MW of power through a cross-border transmission.

Recently, on 20^th May 2019, ESCOM also signed a total of fourteen (14) Power Purchase Agreements (PPAs) with Quantel Renewable Energy Ltd (Solar Power), Monkey Bay Solar Plant Ltd (Solar Power), Kanengo Solar Project Limited (Solar Power), Mzimba Wind Farm Ltd (Wind) and EGECO (Hydo and Thermal Diseal). A total of five hundred fifty one point five (551.5) MW will be generated following the implementation of the 14 PPAs.

Finalisation of Installation of Prepaid Meters to Customers

This reform was undertaken in order to improve revenue collection efficiency, reduce incidences of bad debts, reduce system losses particularly commercial losses perpetuated through meter reading and billing inefficiencies, meter tampers and bypasses and reduce administration overheads associated with meter readings, billing, disconnections and reconnections.

Currently, most customers are on prepaid meters and ESCOM has also managed to migrate most large power users to prepaid metering. The Corporation also recorded significant reduction in system losses due to among others, gains made through installation of prepaid meters.

Looking at the reforms initiated and progress made, ESCOM is doing a commendable job in undertaking its reforms.