By Cosmas Kaunga, ESCOM Outreach Officer
Electricity Supply Corporation of Malawi (ESCOM) Limited says it has suspended the electricity price hike on domestic customers until April 1 2024.
Speaking in Blantyre, Honourable Ibrahim Matola, Minister of Energy, said on November 9 2023 Malawi Energy Regulatory Authority (MERA) announced an increase in electricity prices by 40.92 percent following an application of Automatic Tariff Adjustment Formula (ATAF).
Matola said MERA provides for an automatic tariff adjustment whenever the economic fundamentals deviate by a minimum of plus or minus 5 percent.
Matola said the tariff increase was effective November 10 2023 and was a result of the kwacha devaluation by 44 percent.
“The Government is fully aware that the current economic landscape is impacting hugely on Malawians. We do realise that devaluation of the Malawi kwacha by 44 percent has had huge implications on both access and use of electricity by Malawians,” he said.
“To this effect, we engaged ESCOM to review the situation and come up with a win-win intervention that would not paralyse operations of the company but also ease pressure on the masses that are using electricity.”
Matola, however, said the suspension does not apply to industries and commercial customers.
“The goal of the suspension of ATAF on domestic customers is to ease the pressure on local Malawians and their households as they go through the tough economic conditions,” he said.
Taking his turn, ESCOM Limited CEO, Mr Kamkwamba Kumwenda, said aside ATAF, electricity prices are adjusted by way of the review of the Base Tariff where ESCOM makes an application to MERA on behalf of the electricity sector.
“The Base Tariff is applicable for a period of four years. You may recall that this year, MERA approved an 18 percent increase in electricity prices for this year which became effective on September 1 2023,” he said.
Kumwenda said ATAF is another way by which electricity prices are adjusted to cushion ESCOM and EGENCO from the effects of exchange rate losses and inflation in order to continue providing quality services to customers and communities.
Kumwenda said the recent devaluation of the kwacha has plunged the company into K83 billion exchange losses from the loans that the company obtained.
“Furthermore, Independent Power Producers and other suppliers have made requests for price adjustments ranging between 40 percent and 43 percent in response to the kwacha devaluation,” he said.
“But as a company that cares for Malawians, we have to make sacrifices in order to assist our customers manoeuvre through the tough economic situations by not overburdening them with high electricity prices,” he said.
The suspension of ATAF means domestic customers will be buying electricity units at K94 other than K132.50 before tax.
