ESCOM owes EGENCO K24 billion

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By Earlene Chimoyo & Clement Msiska

The Electricity Supply Corporation of Malawi (ESCOM) is failing to pay billions of Kwacha in arrears to power producer Energy Generation Company (EGENCO)

This has been confirmed by the two firms when they appeared before the parliamentary committee on Energy and Natural Resources of parliament.

Since the review of the country’s energy law to allow for Independent Power Producers (IPPs), the only producer operating and supplying power to ESCOM is EGENCO.

The power supplier purchases the electricity through what is known as a single buyer which is an intermediary between ESCOM and IPPs.

However, the supplying company has been failing to pay for the energy in the process accumulating the said amount in arrears.

Director of Distribution and Customer Services for ESCOM Alfred Kaponda has disclosed that they owe billions in  

“Just for EGENGO there is a total of K24 billion which we are gradually paying and we think when our core structure changes the next few months, and then we shall accelerate in terms of repaying.

Currently the power supplier is facing cash flow challenges which are affecting it in some of its operation.

The corporation is also trying to get loans from commercial banks towards financing new connections.

Kaponda disclosed that the cost of a new connection is not covered by the amount customers pay to get connected, hence they are losing money “

“We import materials, and another issue is that when we ask the customer to contribute towards connection fee, they only pay 30 %of the true cost of effecting that connection, for example the cost of a pole is 150,000.00 but the customer only pays total cost of around K46,000.00 to get a connection. Over a period of time ESCOM is struggling with cash flow to supplement that amount of money customers pay for us to connect,”Kaponda explained.

Despite all these challenges the corporation is mindful of how the two entities rely on each other for survival.

“Survival of EGENCO also ensures survival of ESCOM because they produce power which we sell, we cannot see EGENCO drown and think we can survive, we complement each other,” he added.

The news is also coming at a time the country has been re-introduced to frequent blackouts popularly known as load shedding.

ESCOM is hopeful that if there is intervention on how they can get more loans from commercial banks to support their connection services, they will be able to effectively settle the debt.

 

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