Electricity Supply Corporation of Malawi (Escom), the sole electricity distributor in the country, is said to be splurging about K1.6 billion a month to run the diesel generators as part of its short-term intervention to ease the challenge of electricity blackouts that has cost the private sector revenue for private sector and crippled many households.
Escom is buying the diesel through another state enterprise, the National Oil Company of Malawi (Nocma), at K492 per litre. Market price for diesel is currently at K 815 per liter.
Last year, Escom leased 84 gensets from Aggreko, which can only produce 78 megawatts (MW) for six hours each day, contributing 9.10 percent of power to the national grid.
Currently, two plants Chichiri and Kanengo,-are up-and-running, adding a combined capacity of 55MW to the grid. Chinyama plant in Kasungu is also on the grid with 20MW.
Addressing the media in Blantyre on Monday, Escom Chief Executive Officer, Allexon Chiwaya, defended the solution of gensets, saying the option has resulted in the reduction of load-shading hours from an average of 24 hours for most days of the week to six hours.
“The blackouts situation forced Escom to bring in emergency power to cover the deficit in the short term. It has lessened projected potential economic losses to the industries, business and economy in general,” said Chiwaya said.
Our calculations show that the three sites combined could use a total of 112, 500 liters of diesel a day, at a cost of K55, 350, 000.
In a month, the three sites could use a total of about 3, 375,000 liters at an estimated cost of K1,660,500,000 and the result is a high fuel import bill which would in turn also push up the amount of dollars needed for imports per month.
This, economic experts say, is a more expensive option than hydro-power generation which is far much cheaper than diesel-generated power.
Escom Board Chairperson, Thom Mpinganjira, told journalists recently that the cost of running the generators would not be passed on to customers.
The generators are estimated to run for 24 months while the country is revitalising its energy sector.
Escom is reported to have posted a loss of K6.3 billion in the half year-ended December 31 2017, due to deferred 6.72 percent tariff adjustment which was supposed to be effected in November 2016 and the increase in tariff by Energy Generation Company (Egenco) from K19 per kilowatt hour (kWh) to K25/ kWh.
Treasury also attributed the Escom’s loss to the cost of hiring of diesel generators which were purchased at an average price of K191.88 million.