Chilima tells ESCOM to stop buying fuel for Aggreko

…Resolves EGENCO-ESCOM wrangle

Vice President Saulos Chilima has told Electricity Supply Corporation of Malawi (ESCOM) to stop buying fuel for Aggreko’s generators and he has also helped end a dispute involving Electricity Generation Company (EGENCO) and ESCOM.

Chilima on Friday chaired a meeting with ESCOM, EGENCO, Malawi Energy Regulatory Authority (MERA), the Ministry of Energy and the Public Sector Reforms team.

Participants during meeting

He said one of the resolutions made at the meeting is that ESCOM will stop buying fuel (diesel) for Aggreko to generate power using generators.

“We have given ESCOM 30 days to resolve this with Aggreko. It does not make any economic sense for ESCOM to be buying fuel to supply to Aggreko and then the same Aggreko sells power to ESCOM using the same fuel that ESCOM provided. We have advised ESCOM to avoid signing agreements that do not make financial sense,” said Chilima.

Today’s meeting followed another meeting held on 22nd July, 2020 when Chilima met the leadership of ESCOM and EGENCO to discuss a two-year roadmap for power generation to achieve steady power supply.

During the July meeting, EGENCO presented a number of challenges choking its operations which include billions of unpaid electricity bills sold to ESCOM; and the non-conclusive unbundling process that has left EGENCO without legal title of assets.

On the other hand, ESCOM – as a power supplier – presented a number of challenges too including the K1.8 billion average monthly bill which EGENCO charges but ESCOM feels the charges are wrongly calculated therefore not sustainable.

“This financial and asset dispute in question had been a hanging operational sword on the heads of the two institutions and it seemed there was a deadlock. In fact, ESCOM was disputing by more than 50% the figure that EGENCO presented as ESCOM’s bill,” said Chilima.

To resolve the issue, the Vice President called for today’s meeting where it was agreed that the financial and asset dispute between ESCOM and EGENCO should be resolved by Friday next week.

Treasury will meet with the two institutions on Tuesday to spell out the way forward following the resolutions that have been made.

Chilima said the end of the dispute will bring the unbundling of ESCOM into ESCOM and EGENCO to its fair conclusion. He added that the focus now will be on improving power supply.

He said: “After resolving these outstanding issues, what remains now is to put down a two-year joint roadmap between ESCOM and EGENCO that will ensure that the current stable power supply is maintained or improved with surplus within the stipulated two-year timeframe.”

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