Chilima resolves EGENCO, ESCOM dispute

Vice President Saulos Chilima has ended the dispute between Electricity Supply Corporation of Malawi (ESCOM) and Electricity Generation Company (EGENCO) over electricity payment arrears which choked operations of the two institutions.

Chilima who is also Minister of Economic Planning and Development; and the Public Sector Reforms has facilitated an agreement between the two state-owned organizations.

On 7 August, EGENCO complained that ESCOM owed it K53 billion in unpaid electricity bills. On its part, ESCOM protested the K1.8 billion average monthly bill which EGENCO charges the supplier but ESCOM feels the charges are wrongly calculated.

In a statement today, Chilima said it has been agreed that ESCOM should pay K11.7 billion out of the K53 billion which it owes EGENCO by 31st December, 2020.

“Sixty percent of the balance equivalent to K25.2 billion to be paid by 31st December, 2021. The Ministry of Finance will also facilitate that EGENCO issues a Credit Note for the remaining 40 percent balance. This means no bail out for ESCOM,” said Chilima.

The vice president also revealed that a resolution has been made on the billing for energy transmitted between ESCOM and EGENCO.

“To this end, it has been resolved that ESCOM and EGENCO should use the existing metering facilities to determine actual energy transmitted between the two entities effective 17th August, 2020. It has also been agreed that the Ministry of Finance will facilitate the review and amendment of the current Power Purchase Agreement (PPA) and ensure that the new signed PPA is put in effect by 1st November, 2020,” said Chilima.

Meanwhile, the Ministry of Economic Planning has set up a task team to drive ESCOM’s turn-around strategy.

The Task Team members will come from the following ministries: Ministry of Finance, Ministry of Economic Planning and Development, Ministry of Energy, Ministry of Justice and Department of Statutory Corporations.

According to Chilima, the turn-around strategy and the roadmap, once developed, will be made public and monitored under the Public Sector Reforms Programme in the administration of His Excellency Dr. Lazarus Chakwera, President of the Republic.