Energy is high on the agenda in Malawi as the insufficient and erratic electricity supply adversely affects business in Malawi. Two mining companies in Malawi, Terrastone Construction Limited and Zalewa Agricultural Lime Company (ZALCO), raised concerns about the frequent power cuts with the Minister of Mining John Bande during visits.

Family owned Terrastone, which produces ready-mix cement, has quarries in Njuli and Lunzu, in southern Malawi, and employs more than 100 Malawians. Isabel Oliveira, the Manager, explained that the blackouts could cause the company to lose business.

Martin Saunders the Managing Director of the limestone company ZALCO concurred with Oliveira and stated that the biggest challenge the business faces is the lack of a consistent supply of electricity. ZALCO produces 170 tonnes of lime per day with markets in Malawi and Mozambique.

Paladin Africa, the operator Malawi’s largest mine – Kayelekera Uranium Project, 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. In addition, one study conducted in 2012 suggested that Malawi loses USD 4,215 million per year due to power outages.

Energy is consequently one of the key areas highlighted in the nation’s Economic Recovery Plan, launched half a year ago by Joyce Banda’s administration, and we recently blogged about companies with interests in developing Malawi’s energy sector. Of note was Intra Energy Corporation (IEC) announcement in March that they will construct and operate a 120MW (net) coal fired power station in Malawi through a wholly owned subsidiary. This will consolidate IEC’s activities in Malawi; it currently holds three licences to prospect for coal and another to mine coal reserves.  prospecting of coal sites in Malawi.

Last week, the government revealed that the Kapachira Hydro Power Plant in Chikhwawa will be completed in December of this year, 3 months after the planned completion date. The plant is expected to add 64MW to the grid according to Minister of Energy Ibrahim Matola. The government has also conducted feasibility studies at potential hydro electricity generation sites at Chasombo and Chizuma, with studies ongoing at Mpatamanga, Chimgonda and Nkholombidzo. They have the potential to produce 600MW all together; just over double the current supply.

A regional development in energy will also benefit Malawi. In April, Mozambique’s president Armando Emilio Guebuza travelled to Lilongwe to sign a power interconnection agreement with Malawi’s government. Matola explained that Mozambique will finance the 200km power connection from Tete to Balaka, in Malawi, while Malawi will finance the 800km extension of the connection from Balaka to Nacala and feasibility studies on the project will start soon. The World Bank, the African Development Bank and the Norwegian government are expected to provide loans for this multi-million dollar project.