Malawi Government through the Ministry of Finance, Economic Planning and Development has signed a Memorandum of Understanding (MoU) with African Trade Insurance (ATI) agency to protect Independent Power Producers (IPP) from delayed payments.
Through the MoU, Malawi is expected to diversify its energy mix and make a significant dent in its electrification rate under the Regional Liquidity Support Facility (RLSF).
Speaking at the signing ceremony of the MoU, ATI’s Regional Underwriter for Southern Africa Pizzaro Lukhanda said the RLSF is to help more IPPs to come to Malawi to help in the energy sector.
“The facility will help IPPs to obtain the needed liquidity in the event that their off taker delays payment,” said Lukhanda.
He explained further that IPPs are to have collateral to access funds from the bank when government delays payment.
“Treasury will no longer be issuing the guarantees and all the IPPs seeking guarantees from the government will be referred to ATI,” he added.
With initial capacity of USD74 million from German Federal Ministry for Economic Cooperation and Development, Malawi and other Sub Saharan countries are to have incentives to boost energy sectors in their respective countries.
Malawi is expected to have more IPPs that are to bring more renewable energy sources to feed the national grid.
Currently, Malawi produces less than the recommended 370 megawatts a development that lead to persistent power cuts.