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MERA having hopes in IPPs as electricity tariffs increase

Independent Power Producers (IPPs) that promised to roll out their operations in the country are being challenged to work on implementing their projects to avoid affecting energy regulator’s tariff planning.

The delay in rolling out operations according to representatives of Malawi Energy Regulatory Authority – MERA makes them fail to make proper calculations on tariffs.

The concern comes after the regulator, on Monday announced an electricity tariff increase of about 10.6%.

MERA Consumer Affairs and Public Relations Manager, Fitina Khonje speculates that other IPPs are showing indication of starting their works soon amid delays caused by Covid-19.

“There were so many promises at some point that so many of them would roll out but that hasn’t taken place, but we believe there could be so many factors,” indicated Khonje.

Khonje further pointed out that MERA is currently waiting on reviews that will guide how power producers that do not live to their promises should be dealt with, as some IPPs blame their delay on Covid-19.

She however indicates that MERA wants tariffs that are cost reflective, which would enable power producers recover costs while at the same time having a reasonable margin.

“This cost reflectivity was arrived at during the base tariff review in 2018 and what remains now is that we should be reviewing the tariff to make sure that its value is still the same and cost reflective,” added Khonje.

The energy regulator has increased the average tariff from 94.43 kwacha per kilowatt per hour to 104.46 kwacha per kilowatt per hour.

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This they argue is to provide for reinstatement and restoration of the value of the tariff and to enable ESCOM to recover lost revenue from the period MERA withheld an increment in 2020.

The coming in of IPPs is anticipated to have an impact on the cost of electricity for the customer, while increasing power supply to meet the country’s growing demand.

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