Malawi Business Keen on Power From Mozambique

BLANTYRE, Malawi, Feb 28, 2011 (IPS) – The feasibility study looking at connecting Malawi’s electricity grid to Mozambique’s Cahora-Bassa hydropower station was completed 15 years ago; a price for power was long ago agreed by the respective governments: but somehow the project is yet to go ahead.

In recognition of serious energy shortfalls in Malawi, the World Bank has committed 200 million dollars to a project to connect Malawi to Mozambique and thus to the Southern Africa Power Pool which enables power to be shared across the subregion.

But Parliament has been engaged in a game of political football over it. Government says legislation necessary to implement interconnection, which would see a transmission line constructed from the Matambo sub-station in Mozambique to Blantyre West in Malawi, has been blocked by the opposition-dominated parliament.

The opposition responds that the bill was approved by President Bingu wa Mutharika before it was passed by parliament – proper scrutiny is required before a project of this magnitude can go forward.

Costly delayMeanwhile Malawi’s business community continues to struggle with the frequent power blackouts.

Symon Itaye, Managing Director of Packaging Industries Malawi Limited (PIM) says, “We tried to expand our business but failed and are spending millions of dollars on fuel to run generators when blackouts occur during production.”

PIM manufactures products such as cartons, paperboards, packaging papers and trays for eggs. Itaye says that as a company with clients across the Africa region, it needs an uninterrupted power supply.

“We will support any initiative government would wish to put in place in dealing with the frequent power blackouts currently haunting Malawi, for the mere fact that without power, businesses operations come to a halt,” says Itaye.

Blantyre-based businesswoman Christina Phwitiko, who packages and exports fruit juice to Mozambique, Zambia and Tanzania, says the power interruptions make it difficult to fulfill ambitious contracts. “Last month, we won a tender to supply our products to a road construction company but we failed to meet the demand and the contract was terminated. We lost millions of dollars in the process.”

She says companies are reluctant to invest in advanced equipment that would boost production because of power interruptions.

Joseph Gondwe, director of beverage-maker Malawi Business Company, agrees. “We had designed a plan to produce and supply soft drinks to different regions, but our equipment was damaged as a result of blackouts. This speaks volumes of how difficult it is to set up a company in this country.”

Gondwe’s company has been forced to abandon plans for expansion and retrench some of its staff; he doesn’t envision attempting it again before the electricity situation is resolved.

“This could be history only if we had reliable power supply. That’s why we are saying that when parliament meets [in the first week of March], we want to ask government to consent to the bill,” Gondwe said.

Opposition insists on oversight

Speaking to IPS, the deputy leader of the United Democratic Front (UDF), Atupele Muluzi, says the opposition has never been against the bill, considering the energy shortage.

But Muluzi emphasised the need to scrutinise every bill before it can be approved and then signed into law by the president.

“We were against the procedure. How could the president assent to a bill which had not been debated upon and passed in parliament?” Muluzi asks. “Since the president accepted having [prematurely] signed it by mistake, that is now water under bridge.”

He however notes that the UDF’s substantial concern over a clear plan for how the country would meet its financial contributions to Mozambique over the 20 year life of the deal, despite the government’s shortage of foreign exchange.

“Forex [foreign exchange] continues to be a problem that is why it is being rationed. If we cannot afford to import fuel because of forex shortage, how about the interconnector deal which requires $480,000 monthly? What are we going use to pay Mozambique?” Muluzi wonders.

The 2007 power interconnection agreement between Malawi’s state electricity company, ESCOM, and its Mozambican counterpart, Electricidade de Mozambique, commits the Malawi government to paying a fixed charge of $480,000 per month for 20 years.

Almost all of Malawi’s power comes from a linked series of hydroelectric plants on the Shire River. The maximum generating capacity falls short of the country’s needs, and while Malawi is considering constructing additional capacity on the river, output will be vulnerable to both drought and flooding.

Interconnection to Cahora-Bassa will help to offset these risks.

The new lines will be able to transmit at least 200 MW to bolster Malawi’s energy supply. ESCOM says that if the project is implemented, it will stabilise supply, supporting economic growth and increase revenue collection for the state power company.

By George Mhango