Energy Deal Between Mozambique and Malawi Amended

Malawi may be involved in an international dispute with one neighbouring nation, but it continues to foster amicable ties with another. Today, Malawi’s Secretary for Energy, Winford Masanjala, confirmed that Malawi and Mozambique have amended their agreement on electricity.

From 2008 to 2011, the Government of Malawi, under Bingu wa Mutharika, rejected a power interconnection deal arguing that it would be too costly for the taxpayer; Mutharika claimed Malawi would have to pay more than Mozambique. In April 2012, when Joyce Banda took over presidency, diplomatic ties were restored with the president of Mozambique, Armando Guebuza. The two heads of state signed a Memorandum of Understanding in May 2012 to signal interest in cooperating in the energy sector.

In the new Power Interconnection Bill, the two countries, both members of the SADC Southern African Power Pool, have agreed to import and export electricity to each other. Previously, Malawi had agreed to only import electricity from but not export to Mozambique.

In Malawi, 98.5% of electricity is generated from hydroelectric plants that are operated and managed by ESCOM along the Shire River in Chikhwawa in southern Malawi. Mozambique produces excess electricity at the Cahora Bassa dam in the western Mozambican province of Tete which Malawi will benefit from.

The change to regulations is unlikely to affect Malawi since the parastatal Electricity Supply Corporation of Malawi (ESCOM) is unable to meet the current domestic need. At present, ESCOM has the capacity to generate approximately 285 million watta against a suppressed demand of approximately 386 million watta.

The shortfall in electricity is affecting Malawi’s economy. One study conducted last year suggested that Malawi loses USD 4,215 million per year due to power outages. This is evidently a challenge for mining operations in the country. The Nation newspaper reported last year that Paladin Kayelekera uses about 1.5 million litres of diesel every month to power generators for the uranium mine in Karonga. The company wants to connect to the national grid by September 2013.

The deal with Mozambique along with the commitments of the US Millennium Challenge Corporation to rehabilitate and modernise the energy infrastructure and the Chinese Gezhouba Group to build a USD 500 million, 1,000 million watt thermal power plant make it more likely that the mining company will connect to the national grid by next year. The same company is also constructing a hydro-electric power plant at Kapichira, which is in its second phase and due to be completed in August, funded by the Malawian government. ESCOM has also announced the identification of three new sites for hydro-electric power plants: Mpatamanga and Kholombizo on the Shire River and Fufu on the South Rukuru River.

The interconnectedness of the energy and mining sectors has been recognised at the highest level. It was highlighted in activities outlined in the nation’s Economic Recovery Plan that was launched half a year ago by Joyce Banda’s administration to bring about a quick turn around of the nation’s economy. Tomorrow’s demonstrations about rising costs indicate that the promised economic turn around is not happening fast enough.

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8 responses to “Energy Deal Between Mozambique and Malawi Amended

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