Malawi to enjoy long term benefits of MCA compact – Mining & Trade Review

201805 Malawi Mining & Trade Review MCA Nkula Energy Malawi

Malawi to enjoy long term benefits of MCA compact

By Deborah Manda

The Millennium Challenge Account Malawi (MCA-Malawi) says though its Malawi compact winds up in September this year, the country will continue enjoying long term benefits of the five year programme.

MCA-Malawi, which is under the US Federal Agency, Millennium Challenge Corporation (MCC), rolled out its US$350.7-million compact to revitalize Malawi’s power sector and reduce poverty through economic growth in Malawi in September 2013.

MCA-Malawi Communications and Outreach Director Zilani Khonje told Mining & Trade Review in an exclusive interview that the programme now in its final year has successfully carried out a number of projects which will continue to benefit Malawi including the upgrade of the backbone of the country’s transmission network to increase the quality and reliability of power supply in the northern, central and southern regions of the country.

Khonje said through the compact, Malawi has increased the capacity to move power from the Southern Region where 98% of power is generated to the Central and Northern Regions, reduced technical losses on transmission lines and provided a secure transmission link between the Southern and Central Regions.

She said:

There is also the construction of new transmission lines including the 400kV line from Phombeya in Balaka to Nkhoma in Lilongwe which is almost complete and 132kV line parallel to existing 66kV and 32kV lines from Chintheche in Nkhatabay to Luwinga in Mzuzu and from Luwinga to Bwengu in Rumphi.

This implies that if there are new investments in generation in the southern region including the Mozambique-Malawi power interconnector, the new highway and the upgraded transmission network will be able to evacuate power from the south to the Centre and North.

Khonje said MCA-M is also in final stages in the construction, rehabilitation and upgrading of Nkula A which will result in an increase in power generation capacity of the station by 12MW thus from 24MW to 36MW.

MCA-M is also constructing several sub-stations including Phombeya which will be the landing point of 400kV Mozambique-Malawi power interconnector.

Substations under construction in Lilongwe include one at New City Centre and Area 25 and in the northern region there is the Sonda distribution substation.

These new distribution sub-stations are going to at least increase and stabilize power supply within these areas. It is of paramount importance that priority areas like City Centre in Lilongwe have their own substations,

she said.

The expected net present value of benefits to be accrued from the compact are estimated at US$67.2million to US$832.0-million projected to be realized during the next 20 years.

The estimated economic rate of return ranges from 18.7% to 24.6% during the compact implementation period with the interconnector as the potential investment to come.

 So you can see that the compact will contribute to more access to power in future and not immediately after we complete the programme. I am saying this because there is a thinking that immediately after the compact ends there will be massive change, no! We should look at the future,

she said.

MCA-M has also been working on strengthening power sector institutions including Malawi Energy Regulatory Authority (MERA), the Electricity Supply Corporation of Malawi (ESCOM) and the Ministry of Natural Resources, Energy and Mining so that there are effective in managing the sector and to create conducive environment for investment in the sector.

For instance to make it efficient in its operations, ESCOM was unbundled and two companies sprung up thus ESCOM and Electricity Generation Company (EGENCO). What this implies is that other companies can come into the market and be competing with EGENCO in selling power to ESCOM,

said Khonje.

Khonje said MCA-M is also working with MERA and the other stakeholders to come up with the right price at which companies will be selling electricity to Escom at a profit so that private players are attracted to invest in the power sector.

Surely, to attract investors the cost of producing power, transmitting, and distributing has to be looked into because everyone wants to invest and make profits and that profit is not for them to keep but it is for them to grow and expand their businesses,

she said.

Khonje also urged Malawians to desist from vandalism and take care of the infrastructure erected by the compact saying it is not only the companies that are benefitting but rather the whole country.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 61 (May 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

 

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