1.0 Background

We would like to acknowledge that some of our valued customers are facing delays in getting new service connections. This is mainly due to non-availability of some materials required to connect customers caused by hiccups in the supply chain. However, we are making all efforts to speed up the delivery of such materials. To address the current challenges, we have since taken some steps.

Furthermore, there have also been concerns regarding the cost of service connections and the basis for charges that apply to those services. Currently, the cost of a service connection is shared between the customer and ESCOM.

2.0 ESCOM contribution towards the backbone infrastructure

ESCOM provides the initial investment in high voltage backbone power lines (11KV or 33 KV), substation/transformer cost and may include low voltage power lines at times. The main aim for ESCOM’s share of capital investment is to bring the network as closer as possible to the customer for him/her to connect at the least cost as possible. Such an investment is financed by end user customers through the tariff over a long period.

2.1 Customer contribution towards the last mile connection infrastructure

Individual customers are required to pay for the cost of the last mile (connection from the nearest or existing network to the individual customer premise). The last mile may differ depending on the type of customer and scopes of work. The last mile for large power users may include high voltage network extension, substation works and low voltage extension providing a service connection. The last mile investment may be shared with ESCOM where the sums are not affordable to a large section of a particular customer segment as is the case with small power users.

3.0 Sources of funding for new connections

The main source of funding for a connection mainly comes from ESCOM and the customers. Other financing institutions such as the World Bank may also come in. Investment cost made by ESCOM is to be recovered through the tariff and over a long period. Share of capital investment by customers is recovered at once and upfront.

3.1 Impact of direct customer contribution vs end user / tariff funding

Higher Capital Investment contribution by ESCOM towards network connection will lead to higher tariffs to all end user electricity customers in the country—even to those who were connected many years back. High connection contribution paid by customers will result in marginal tariff increases over the years but high connection charges and lower connections.

4.0 The basis for the connection charges

The connection charges are to provide a balancing act in providing reasonable connection charges and sustainable increase to the end user tariff. This is achieved through the following:

ESCOM selects and finances electrification projects with high potential for connections to ensure reasonable upfront direct contributions from customers and good revenue flows to sustain the end user tariffs.

Customers from areas that do not qualify for ESCOM funding are required to pay in full if they cannot wait for the turn. This mainly applies where there are very few potential customers in an area.

All projects involving large power users such as three-phase supplies are works that are fully paid for by the customer to minimise the future tariff burden on all end user customers

All areas being developed for Commercial plots for sale are fully funded by the developer and the cost is recovered by the developer through the sale of the plots. This is typical with Lands Department and the Malawi Housing Corporation.
4.1 Fairness and transparency in electricity connection pricing

To ensure fairness and transparency in the pricing for capital connection costs, the following measures have been taken:

Consideration for rebates is made where other customers have benefited from a network that was fully paid for by a customer.

All charges / works for new connections are generated from ESCOM Management Information System based on the designs and scopes of work. The final quotation cannot be manipulated or tampered with to favour or disadvantage someone. The job goes through several technical and financial approval processes before the customer is quoted.

Standard charges are used for some jobs regardless of the scopes of work to make it easy for customers to pay and for ESCOM to administer the quotation.
5.0 Delays in new connections/challenges

Procurement of materials not in stock is in progress and some of such procurements are at an advanced level. Furthermore, the Government, with support from the World Bank, is implementing the Malawi Electricity Access Project (MEAP) to improve electricity access to households. Availability of materials is expected to normalise by early 2022.

In a bid to improve customer service and speed up new connections, ESCOM has introduced new services, which allow customers and private sector participation in service provision

5.1 Public participation in the provision of electricity connections

ESCOM is now allowing the outsourcing of major works where the customers provide materials, labour and transport using ESCOM prequalified contractors.In this regard, the customer only pays ESCOM for the cost of supervision.

Customers who opt for their own service but having paid ESCOM in full, are refunded for the materials if they provide the required materials or with labour and transport if they engage prequalified contractors as well. Customers requiring a service drop only but cannot not wait longer for ESCOM to provide materials, are allowed to source the materials. In this case, no refund is made since the connection charge for service drop is 75% lower than the actual costs. Customers who opt to buy materials and even use contractors that are prequalified by ESCOM, are all required to fill application forms available at all customer services offices.

6.0 Contact information

For more information, contact the following officers:

Southern Region Bubu Mkandawire 0885 983 820 or bmkandawire@escom.mw

Central Region Andrew Selemani 0885 975 791 or aselemani@escom.mw

Northern Region Albert Langisi 0885 913 550/alangisi@escom.mw

MANAGEMENT 8TH SEPTEMBER 2021