Mining & Trade News

Imports grab 30% cement market share Local manufacturers cry foul

There is a growing influx of imported cement brands, mainly the popular Dangotecement, on the Malawi market which is continuing to pose stiff market competition to the local brands in so doing threatening the future of Malawi’s cement manufacturing industry.

Investigations by Mining & Trade Review have revealed that Dangote Cement is emerging as a dominant foreign brand on the local market mainly in the major cities of Blantyre, Lilongwe and Mzuzu, squeezing out brands for local producers Lafarge Holcim Malawi, Shayona Cement Corporation and Cement Products Limited (CPL).

Statistics from local cement manufacturer Lafarge Holcim Malawi indicate that the imported cement has grabbed up to 30%   cement market share.

Malawian traders are mainly importing Dangote Cement from Zambia where the African giant manufacturer has a plant in the City of Ndola.

Cement shop owners Mining and Trade Review interviewed in Lilongwe said the diminishing presence of locally produced cement on the market is due to higher prices of the local products as compared to imported brands of similar quality and strength.

“In my shop, you would find that a local cement brand of lesser strength is being sold at MK6500 which is the same price for Dangote cement with a grade 42.5R. So the local buyers prefer Dangote other than the local brands which entices us to order more quantities ofDangote cement,” said a cement distributor interviewed in Lilongwe Old Town, who preferred anonymity.

Mining & Trade Review got similar sentiments in random interviews with shop owners in Blantyre where besides Dangote there is an influx of other foreign cement brands including Ultra-Semi, PPC, Shuwa Cast and Sinoma, whichis manufactured by China Materials Company Limited Group – a Chinese multinational with branches in a number of African countries including Tanzania and Zambia.

Our investigations in Blantyre also revealed that some foreign cement brands are being smuggled in huge tonnage into Malawi from Mozambique, mainly through the Muloza boarder in Mulanje.

We also established that Dangote is a preferred choice for some construction companies which are hired by government to undertake large-scale construction projects which manifests that the government is issuing licenses to traders to import huge quantities of the foreign brand.

“We, contractors, opt for Dangote because of the pricing aspect. Ordinarily, the difference in prices between Dangote and local cement of the same strength needed not to be that much,” said a Blantyre-based Construction Entrepreneur Christopher Beula.

In Mzuzu and Mzimba, our investigations showed that though local brands mainly for Shayona Cement are in abundance in shops, Dangote is also emerging as a big    competitor.

The Mzuzu Hardware shops are selling DangoteCement 42.5R at K7,000 and Shayona’s brands Thanthwe 42.5R and Akshar 32.5N at K6,000.

“We are used to the popular brands such as Akshar here though over the past few years Dangote seems to be winning a market share,” said a consumer in MzimbaVincent Gondwe.

Shayona Cement Corporation Operations Manager PrajeeshPadmanabhan commented on Mining & Trade Review readers’ forum that locally produced cement brands are encountering stiff competition from foreign brands because the taxation regime in countries such as Zambia from where most of the Dangote cement is imported is more favourable to manufacturing and export business while that of Malawi supports imports.

Padmanabhan said: “Zambia is already charging surcharge and duties if you have to import cement but Malawi does not charge any other tax a part from VAT (Value added tax).”

“Countries such as Zambia are also giving long tax holidays to manufacturers so any investor will be interested to invest in Zambia and export to its neighbouringcountries where there are no any duties.”

“Already Zambia has an excess production capacity while Malawi continues to saturate the market with imports that are draining foreign exchange.”

Responding to comments by Mining & Trade Review readers who raised the point that Malawi Government is not protecting the local cement industry as a way of abiding by the Common Market for Eastern and Southern Africa (Comesa) and Southern Africa Development Community (Sadc) free trade rules, Padmanabhan said it is possible for Malawi to protect the local industry by charging surcharge or through licensing as countries such as Zambia are doing.

CPL Chairman Aslam Gaffar concurred with    Padmanabhan in bemoaning the current business scenario for local cement manufacturers describing it as unhealthy.

Gaffar said: “There is a problem with Sadc and these other regional treaties. Imports are tax free and yet locals in same field are heavily taxed.”

“Malawi will remain forever a dumping ground if we do not activate the Anti-Dumping and countervailing rules provided in these treaties.”

“Zambia charges a 40% import excise duty, plus 5% surcharge then 16% VAT for any cement imports, in Malawi not even VAT because our country has got its own Guptas.”

Lafarge Holcim Malawi’s Head of Marketing and New Solutions ChikondiNg’ombe said it is imperative for the government to ensure that there is a level playing field so that cement imports do not get an upper hand over locally produced products and also for Malawian exports to be   supported.

“The level of cement imports into Malawi has risen over the recent years to account for close to 30% of Malawi’s cement market. While we appreciate the importance of competition, an unfair playing field in favour of imports will have the adverse effect of discouraging local manufacturing investments with consequent negative impact on employment and other manufacturing-linked economic activities,” she said.

Ng’ombe explained that in order to ensure that there is a level playing field on the market, the government needs to deal with smuggling by traders who do not pay taxes hence have undue advantage over local production, and crack down on apparent dumping of product from foreign players.

“As an example, cement brands coming into Malawi from Zimbabwe are sold at prices that are below the selling price in Harare. It would appear that such players are simply aiming at extracting the already scarce forex from Malawi into Zimbabwe,” she said.

Ng’ombe also said the government has to address the issue of uneven tax regimes between Malawi and its neighbours which is there in spite of belonging to the same Sadc bloc.

She explained that imports of cement into Malawi are not subject to any special tariffs but in spite of Sadcmembership, most of the neighbouring countries have placed cement on their list of sensitive products and apply special tariffs on the same to protect their local industry.

Ng’ombe said: “Malawi must look at the treatment by the different countries and, at the minimum, apply the same treatment to achieve a level ground. Failure to do this will continue discouraging Malawian exports while giving undue advantage to imports from those countries.”

She urged Malawian customers to keep up with Lafarge cement as their product of choice despite the market challenges saying the company places a heavy focus on quality to ensure that it has repeat business from its customers.

Ng’ombe said as a locally based cement manufacturer Lafarge ensures that local (MBS) and international            accreditations (ISO 9001:2015) are maintained.

She said: “Importers cannot be subjected to the same level of scrutiny and accountability as it is difficult for customers to trace what they have bought back to the manufacturer.”

“Having said this, it should be notedthat the cement industry has in Malawi brought down prices significantly in real terms over the recent years. This is in spite of major escalation of key cost items such as power and fuel and other challenges such as power rationing. We hope that lasting solutions can be found on these issues in order to allow the industry to bring down production costs and make cement more affordable.”

However, spokesperson for the Ministry of Industry and Trade, MayesoMsokera, told Mining & Trade Review in an earlier interview that government gives licences to traders to import some cement to supplement the deficit from local production.

Msokera said, “As Government, we have the mandate to balance the needs of both the producers and the consumers with regard to availability of this essential commodity as well as its price, and the current cement importation does not amount to an influx.”

He explained that it is the government’s duty to stabilize supply and prices of cement so that they do not destroy the construction industry, which also employs many people and is an integral part of Malawi’s infrastructure and industrial development as it provides a growth impetus to other sectors of the economy through backward and forward linkages.

“We have had situations where cement prices rose to around MK12000 in 2017. Therefore, it is, essential that, cement availability and affordability is safeguarded for the healthy growth of the Malawi economy,” he said.

He, however, acknowledged the fact that some cement is being smuggled into the country and said, as Government, they are considering additional measures of curbing the problem.

“The Ministry is discussing with other Government agencies such as the Malawi Revenue Authority and the private sector stakeholder institutions so that issues of smuggling are addressed holistically. As a Ministry, we would like to appeal to the private sector to hold hands and collaborate with Government in order to loot out this malpractice bedeviling our manufacturing sector,” said Msokera.

He advised local firms to extend their distribution channels to supply their cement to all angles of the country including bordering districts where traders prefer importing from neighbouring countries as a cheaper option.

Msokera assured the local industry of Government’s   support saying the Ministry is advocating for growth and development of local industries through the Buy Malawi Strategy, which encourages consumers to purchase locally produced products which are equally of good quality.

Both Shayona and CPL have invested in multibillion-kwacha construction of clinker producing plants at their factory areas in Kasungu and Mangochi respectively.

Shayona, which has a workforce of over 1200 mostly locals, has a comprehensive CSR programme which has seen the company constructing school blocks at a primary school    close to the Kasungu factory, making drug donations to government hospitals and clinics, and planting trees annually in the factory locality to assist in environmental conservation.

Though its factory is relatively new, CPL also boosts of a CSR programme that has involved donating cooking oil making machines to members of the community in the factory area, constructing school blocks and procuring a transformer to electrify the area that hosts the factory.

Shayona Cement Corporation produces cement brands of various strengths including: Akshar, Buildplast and Thanthwe while CPL’s brands include Mkope and Njati.

Lafarge Holcim Malawi, whose cement brands include Khoma, Kumanga, Duracrate and Supaset, has continued   to show commitment to Malawi with recent investments of close to MKW 1.5billion in a Soil Stabilized Blocks factory (14 Trees) in partnership with the Commonwealth Development Corporation (CDC).

The company is executing the investments in line with its ‘Kumanga Malawi’ programme which is aimed at supporting the Government and other stakeholders in developing Malawi.

Pillars in this program include sustainable building solutions, Small and Medium Enterprises support, Road and Workplace Safety, Employee empowerment and Product usage awareness/ training.

Records from the National Statistical Office indicate that in 2017 alone, imports of cement and clinker amounted to MK28.76-billion.

Dangote Cement, owned by Nigerian billionaire AlikoDangote, is Africa’s largest cement producer with a production capacity of 45.6-million tonnes per year.

Government is progressing with preparations to construct an international airport in Mangochi as part of its plans to turn the district into the centre of tourism in Malawi.

This is contained in the State of the Nation Address that State President Arthur Peter Mutharika delivered in parliament in Lilongwe at the opening of the 2019/2020 budget meeting.

He said: “My Government recognizes that we need more investment in the tourism sector, In that regard, I want to report to this House that we will vigorously pursue our program to transform Mangochi into a tourism capital of Malawi.”

“We have a plan for a five-star hotel, an international airport, a golf course, shopping malls and modern roads and other top facilities.”

He also pledged to develop tourism facilities on Mulanje and Zomba mountains including cableway cars to attract more visitors to Malawi.

Mutharika said as part of tourism development, his government has also undertaken extensive rehabilitation at Chileka International Airport.

“The resurfacing of the main runway is underway in order to improve the airport so that we increase its air traffic activity,” he said.

Mutharika told the House that his government has also rehabilitated and expanded the Kamuzu International Airport (KIA) using proceeds of a grant from the government of Japan.

The project involved the expansion of the current terminal building, construction of international and domestic departure and arrival terminals, and installation of a radar system.

Mutharika said government’s plans to construct new international airports in Mzuzu and Mangochi are also on course.

On water transport, Mutharika announced that his government has started construction of a MK10 billion port at Likoma Island, and the works will be executed in 18 months.

He said the project comes in the wake of the recent improvement of NkhataBay Port and the installation of light beacons which have enhanced the safety of passengers and vessels.

He said plans are also underway to link Nkhata-Bay and Mbamba Bay Ports under the Mtwara Development Corridor which is 400 kilometres shorter than the Dar-es-Salaam route in order to have additional access to the Indian Ocean.

On rail transport, Mutharika said his Government, in collaboration with Central East African Railways (CEAR) Limited, is rehabilitating the 399-kilometre railway section from Nkaya in Balaka to Mchinji.

“Under the same arrangement, we are also in the process of reconstructing the 72-km Limbe-Sandama railway,” he said.

On road construction, he said his government is working on construction of several major roads including Zomba-Jali-Phalombe-Chitakale,  Thyolo-Thekerani-Muona-Makhanga Road, Njakwa –Livingstonia, Dual Carriage way between Parliament     Round-about and Bingu National Stadium in Lilongwe,  Thabwa-Chitseko-Seveni     Road,  Ntcheu-Tsangano-Neno, Lirangwe-Chingale-Machinga, Lumbadzi-Dowa-Chezi, Kawere-Mkanda, Jenda-Edingeni, Rumphi-Nyika turn-off-Hewe Road, and Blantyre Ring Road.

Introduction

Currently several small wind power generators are installed and supplying power to Villages in Thyolo, Chiradzulu, Ntcheu, Nkhotakota, Nkhata Bay and Mzimba. Under this Village Electrification Project the total installed capacity is 132 kW of which 90 kW is from wind. The wind/solar hybrid installations are supplying up to 150 homes within a 2km radius in each village. However this shows that there is potential for large wind turbines which can generate electricity up to 5MW each.

Project Sites for Wind Power Generation

 – Lilongwe

Four sites were visited around Lilongwe old airport and Kamuzu international airport (KIA) where the Department of Climate Change and Meteorological Services has measured wind speed at 10 meter height for more than 10 years. Out of the four sites assessed, a place near Luke Daeyang Hospital was identified as potential site. The site is 12 km from Lilongwe; 2 km from the existing grid at Kanengo and the area is bounded by M1 road and the road going to Malawi Institute of Management. The average wind speed was 5M/s at the time of the visit to the site.

Ownership of the land is not yet known but it is suspected that it belongs to Kanengo Northgate Project. Efforts are underway to check with the Commissioner for Lands to determine ownership of that piece of land.  The site is near a hospital, but it is on the wind-ward side so the noise is unlikely to have much effect on the hospital. Adjacent to the hospital is a proposed site for a nursing school, but it is still recommended that the site should be assessed further because it is near to power grid, can easily be accessed by road and both the hospital and the nursing school are on the wind ward side.

Looking at the size of land available, it is recommended that four turbines of 2 MW each can be erected on this site making a total of 8 MW installed capacity. This is based on the fact that the spacing between adjacent wind turbine towers is 7-15 times the rotor diameter. This recommendation is based on the assumption that this piece of land stretches to the east where wind speed is anticipated to be the same.

 – Mzimba

A site in Mzimba was identified at Kanombo Hills, 8 km North West of MzimbaBoma. The site has an average wind speed of 8m/s at a height of 2 metres. The site is 8 km from the existing power grid at Mzimbaboma. The hills are under customary land therefore ownership of the land may not be an issue. Houses are far from the site and therefore there will be no effect of noise pollution on the population.

Based on the same principle that the spacing of wind turbines is done in relation to the rotor diameter, four turbines of 2 MW each can be erected on this site making a total of 8 MW installed capacity.

 – Mzuzu

Kaning’ina Hills were identified as a potential site for installation of wind turbines for power generation. The site has an average wind speed of 9m/s at 2 metres height. It is about 10 km from Mzuzu city and the existing grid.  Kaning’ina Hills are gazzetted under natural forest reserve hence the land is controlled by the Forestry Department. It is situated far from residential areas.

In view of these facts therefore, there will be no noise pollution effect on the population of Mzuzu City. The only problem would be the high cost of constructing access road to the top of the hills to deliver and maintain the wind turbines.

On this site, 5 turbines of 2 MW each can be erected giving a total of 10 MW installed capacity.

 – Chileka in Blantyre

Four sites around Chileka in Blantyre were visited and assessed. Out of the four sites, a place on top of the hills near Andiseni Primary School,  west of Chileka Airport, was identified as a potential site. The site is 20 km from Blantyre and 2 km from the existing power grid. The average wind speed is 3.5m/s.

The Andiseni Hill is under customary land which means ownership of the land for installation of wind turbines may not be a problem at this site. Houses are far from the site and therefore there will be no noise pollution effect on the population around Andiseni Primary School.

Two turbines of 2MW each can be erected on this site making a total of 4 MW installed capacity.

Government says it is implementing a master plan to develop the tourism sector, which involves putting up necessary infrastructure to create a conducive business climated for existing players in the industry and intensifying promotional activities to attract more tourists and investors.

Chief Secretary in the Office of the President and Cabinet, Lloyd Muhara, said at the launching ceremony of this year’s three day Takulandirani Malawi Tourism Expo that the masterplan will be implemented over a period of 25 years and will guide planning, zoning and promotion of tourism investment in the country.

Muhara said as part of the plan, the government has constructed two access roads in the tourism district ofSalima connecting lakeshore resorts to the main road and acquired over 17 hectares of land along the lakeshore for development of public beaches which will act as a model for tourism development along the lake.

He said the Ministry has also upgraded the Kamuzu international Airport with assistance from the Japanese Government through the Japanese International Cooperation Agency (JICA).

The chief secretary also said government is implementing the Promotion of Investment and Competitiveness in the Tourism Sector (PICTS) project with financial support from the African Development Bank (AfDB) to the tune of US$10-million.

Muhara said: “The project seeks to build and strengthen institutional capacity in tourism statistics development and implementation of Tourism Satellite Accounting system for Malawi.”

“This will improve collection of tourism statistics to provide a better case to Government for public funding of the sector.”

The project will also build capacity of 500 Small and Medium Enterprises (SMEs) in the tourism sector through training and provision of loans to the SMEs.

It will as well enhance law enforcement in Kasungu and Lake Malawi National Parks to reduce wildlife poaching and strengthen the Malawi Tourism Council, which is the voice of the tourism private sector so that it serves its members more effectively.

He said the project will involve development of an Eco-tourism strategy to ensure sustainable utilization of Malawi’s unique nature-based attractions, support review of culture legal framework and instruments and develop tourism infrastructure at Chongoni World Heritage site which projects Stone Age rock art.

Muhara explained that with these interventions the project will not only boost Malawi’s capacity to attract foreign investment in the tourism sector but it will also enhance the country’s capacity to satisfy tourism needs.

Malawi’s travel and tourism sector contributes 7.7% to the country’s gross domestic product (GDP).

Malawi’s leading mineral sector consultants Akatswiri Mineral Resources in collaboration with Zomba-based Enviroconsult have successfully completed an environmental and social impact assessment (ESIA) study for oil exploration in Blocks 4 and 5, which are held by prospecting firm Rak Gas MB45.

The study, whose report has been submitted to the Department of Environmental Affairs for approval, involved community consultations in districts covered by the two blocks which include Machinga,        Mangochi, Dedza and Salima, and national consultations in the Capital City, Lilongwe.

Rak Gas contracted Akatswiri and Enviro-Consult to conduct the ESIA in preparation for seismic operations which will be conducted in the blocks to identify oil and gas traps.

Project Coordinator Hilton Banda says: “The seismic studies entail using a vibrator truck that sends a signal from the ground and recording truck to detect sediments and their depth. The technology uses geo phones mounted on the cable that transmits a signal to a computer.”

“There was, therefore, a need to undertake the ESIA to assess the environmental impact of the seismic exploration work and develop an environmental management plan that contains mitigation measures.”

Banda, who is CEO for Akatswiri, explains that the ESIA involved studies on Geology and Soils, Air Quality, Water and Hydrology, Waste Management, Noise and Vibrations, Transport and Energy needs, Flora, Fauna, Fish, Habitats and Land use, Archaeology and Cultural Heritage and Social Issues as key parameters that require baseline assessment in order to determine potential impacts and their mitigation approaches.

Geology and Soils

The Akatswiri CEO, who is a seasoned geologist, explains that the team conducted geological field mapping in which major lithological and soil units were mapped and sampled for subsequent mineralogical analysis.

He says the team recorded systematic measurements of structural features, field relations and cross-cutting relationships and in addition to field mapping they used existing geophysical data to interpret structural features which could not be seen on the ground as the ground is mostly covered by sediments.

The area is overlain by recent sediments of lacustrine in nature and has been affected by rift faulting which defines the Malawi Rift Valley. NE and NS trending faults, and shear zones present in the area may render critical insights into the structures which might trigger potential landslides or earthquakes.

The project site is dominated by the presence of marsh and agricultural soils. The soil fertility status is augmented through fertilisation to sustain crop production, and soils are moderately acidic.

“The impact assessment shows that the proposed project will have a low to moderate impact on the geology and soils in the study area,” Banda says.

Air quality

He says the air quality assessment was intended to characterize the existing environment and identify the environmental and social hazards associated with the seismic activities on air quality, assess the magnitude and significance of the risks (the likelihood of the hazard and the severity of the impact) and provide a description of the proposed control techniques to eliminate or mitigate the likelihood of the hazard or severity of the impact and development of plans / procedures to manage consequences of exceptional events.

“The results from the baseline survey show that levels of the major air quality parameters (total suspended particulate matter, SO2, NO2, CO and H2S) were below the guideline values according to Malawi Standards (MS737:2011) and World Health Organisation (WHO) guidelines. However, in most of the cases, levels of methane were noted to be significant, mainly arising from decomposition of livestock excreta,” he says. 

Hydrology and water quality

Banda says in order to assess hydrology and water   quality, water samples were collected from block 4 and 5 from boreholes, shallow wells, rivers and analyzed for physical-chemical parameters: temperature, pH, Total Dissolved Solutes (TDS), Electrical Conductivity (EC), Turbidity, F-, Cl-, NO3-, SO42-, carbonates, Na, Ca, Mg, Cu, Mn, Zn, K, and total hardness.

“The results were compared to the World Health Organization (WHO) and Malawi Bureau of Standards (MBS) standards to ascertain the water quality. Analysis of the data indicates that the major water quality parameters are deemed within guideline limits indicating that the water is generally unpolluted. The impact assessment shows that the proposed project will have a low to moderate impact on water resources in the study area,” Banda says. 

Waste Management

The ESIA Project Coordinator also assures that the   seismic surveys are not expected to generate waste streams with high environmental and social impact.

The common sources of waste streams pointed out in the study include presence of workforce, seismic survey activities and vehicle maintenance wastes.

Banda says the expected non-hazardous wastes include domestic wastes (garbage and sewage) and effluents, paper, line cables while hazardous wastes include pharmaceuticals, waste oils, spilled fuel and lubricants and used batteries. The potential impact of wastes is deterioration of water and soil quality affecting terrestrial and aquatic ecosystem (fauna and flora).

In mitigation, he says Rak Gas will implement a Waste Management Plan (WMP) in line with Open Government Partnership (OGP) guidelines for waste management (OGP, 1993; 2008).

Banda says: “As far as practicable, Rak Gas will use existing sanitary facilities in the target areas (otherwise mobile toilets should be used). Solid wastes will be segregated at source in terms of recyclable, reusable, biodegradable and non- biodegradable, hazardous and   non-hazardous, or disposal as appropriate. The Seismic Team will make sure that it does not leave behind any solid waste during the seismic activities.”

“Buffer zone distances between water and seismic lines, sanitary and biodegradable garbage pits will be observed as per International Association of Geophysical Contractors (IAGC) guidelines in order to protect the surface water bodies. Non-biodegradable, flammable wastes may be burned and the ashes buried with the non-flammable wastes. This burial should be at least one meter deep, with due consideration to the area’s water table.”

“All hazardous wastes will be isolated and collected for disposal in regulated municipal facilities. Although, the likelihood of major impacts from accidental spills is low, it is recommended to ensure that requirements of oil spill and emergency plans must be met before operations commence.”

Power utility Electricity Supply Corporation of Malawi (Escom) says it is making great strides in its preparations to start importing power from the Southern Africa region through the Mozambique – Malawi Power Interconnector.

CEO Alexon Chiwaya lauded the progress made on   the project after Escom signed five agreements with Mozambique power utility Electridade De Mozambique (EdM) to operationalize the interconnector.

The agreements include; Project Implementation, System Operating, System Maintenance, Wheeling and Power Purchasing.

The project will in its initial phase see Malawi importing 50 Megawatts (MW) from Mozambique.

Chiwaya said: “The signing of these agreements manifests that we are making satisfactory progress in the project.

“The Power Purchase Agreement (PPA) is for a period of five years while the Wheeling Agreement will take 20 years to cover the estimated period for the cost recovery of the investment for the line by EDM and renegotiation will take its course after the agreement period.”

Under the Wheeling Agreement, Escom will be paying EdM for the full cost of investment for the Mozambique portion of the interconnector, and the latter will in turn give Escom rights over the line.

He stressed that, if any other party wants to wheel power through the line, including EdM, appropriate      compensation will have to be worked out to Escom to offset the full cost that Escom will have been paying for the line.

Chiwaya also said though the project is intended to import 50 MW, the power demand-supply balance for Malawi shows that, due to delays in the implementation of major power supply projects in the country in the medium to long-term, Malawi will need to import about 200MW of power from Southern African Power Pool (SAPP) for two to three years after the interconnector is commissioned to cover the projected power supply deficit.

“Kindly be informed that ESCOM has already engaged ESKOM of South Africa on the proposed power imports for a short period of three years and required agreements are being drafted,” he said.

Chiwaya said availability of adequate power through the interconnector will make significant contribution to the growth of economic sectors in Malawi including manufacturing, agro-processing, the service sector and tourism.

He commended both EdM and Escom personnel for tirelessly working on the project preparations and responsible ministers from the two countries for the policy direction.

The CEO also thanked World Bank, German’s KfW, European Union and Norwegian Trust Fund for financial support towards the project.

“Let me assure the financiers and all stakeholders that we will sustain the investment and ensure that Malawi works towards attracting Southern Africa Development Committee (SADC) Member States to trade in power with the country,” he said.

Mozambique’s Minister for Mineral Resources and   Energy, Ernesto Tonela, said he was happy that the project that involved prolonged negotiations between the two countries has culminated into the signing of the necessary agreements.

“We will make sure that Mozambique exports power to Malawi and in future Malawi will also be able to export power to other countries as it connects to the power pool,” he said.

He assured Malawians that though the project will initially be selling 50 MW to Malawi his government is willing to increase supply according to Malawi’s demand.

The scope of the project is to interconnect Malawi-Mozambique power systems at 400kV through              transmission line from Matambo substation in Tete province in Mozambique to Phombeya substation in      Balaka District in Malawi.

The project will by default connect the nation to the SAPP thereby enabling the country to not only buy power from Mozambique but also from the Region.

The total distance from Matambo to Phombeya is 210km with 140km in Mozambique and 70km in Malawi.

The cost of the project is pegged at US$127-million, out of this US$$92-million will cater for the Mozambique side and US$35-million for Malawi.

Malawi, which depends on power generated from its hydro stations on the Shire River, is banking on the           interconnector to solve its power supply challenges emanating from low water levels.

Abstract

Malawi is a land of sunshine and areas of potential for solar energy installation span from north to south along valleys and lake shore region. Chitipa, Kasungu – Lilongwe Plain and the rift valley regions offer a lot of opportunities in investing in solar energy.

Solar energy installation is one way of improving Malawi’s energy mix to foster security of supply. Administrative procedures for obtaining licences and land need to be improved to ease the way of doing energy business. The paper provides initial data for investment decision making.

INTRODUCTION

Malawi continues to struggle to offer reliable and quality power supply. The Electricity Generation Company (Malawi) Limited (EGENCO) has an installed generation capacity of 406.6 MW out of which 335.15 MW is available. There has been a loss of about 165MW due to environmental degradation in the Shire River catchment area leading to low water levels and trash accumulation at hydro power plants.

In order to improve security of supply several solar power purchasing agreements (PPAs) with independent power producers have been signed to improve energy supply mix.

SOLAR ENERGY GENERATION

Solar Energy Generation was initially popularized by Mission Stations in rural areas. Government has installed solar systems in rural trading centres creating solar villages such as Chikweu in Machinga, Kansonga in Ntchisi, and Eswazini in Mzimba.

These targeted mostly key rural facilities such as Health Centers, Community Day Secondary Schools, and Community Halls. Solar Villages involving hybrid systems (Solar and Wind) were installed providing up to 21kW to provide power for a maximum of 150 homes. Even piped water supply systems were served by this hybrid system.

Recently the Japanese Government provided .83 MW of solar installation for electricity generation at Kamuzu International Airport in Lilongwe. Domestic installations are now common as a solution to prolonging load shedding of up to 10 hours experienced in most towns and cities.

Commercial supply of solar power systems are now encouraged.

Success of this initiative requires solar resource mapping so that large installations can be properly located. Detailed information on direct and diffuse radiation, sunshine days and periods of cloud cover help to appropriately size the large power generation solar systems. This solar resource assessment data is essential to understand the magnitude, geographic distribution, characteristics, and variability of the solar resources.

ESCOM is able to generate about 362 MW and has the capacity to accommodate 70MW of renewable energy in its grid. Off grid supplies are also viable.

AVAILABLE SOLAR DATA

The Department of Climate Change and Meteorological Services has recorded solar data for over 30 years using solar recording equipment.

Malawi has the most sunshine hours from April to November. The average annual sunshine hours of 7.5.

The World Bank did some solar resource mapping for Malawi between 2015 and 2018. The assessment was based on satellite-data analysis, global datasets and solar measurement at Chileka, Kasungu and Mzuzu.

There seems to be high levels of photovoltaic power potential in Chitipa, Karonga, Mzimba, Kasungu, Lilongwe, Salima, Ntcheu, Lake Chilwa area, Chikwawa and Nsanje.

The Roads Authority (RA) says it has acquired K1-bilion from the World Bank to carry out maintenance works on roads which were damaged by floods in 15 districts of the country.

Public Relations Officer (PRO) for Roads Authority Portia Kajanga told Mining and Trade Review that the African Development Bank (AfDB) has also shown interest to bankroll the exercise and is still negotiating with the government on amounts to be disbursed and other logistics.

“The damage caused by floods on the country’s road network was quiet big especially in the southern region of the country such that some roads had to be closed and some areas were cut off for a number of days,” she said.

Districts which were heavily affected by floods include Chiradzulu, Thyolo, Mulanje, Phalombe, Blantyre, Zomba, Nsanje, Chikwawa, Mwanza, Neno, Machinga, Balaka, Mangochi, Ntcheu and Dedza.

Kajanga said government already spent around US$866,000 to repair most of the affected roads by providing diversions for World Food Programme to access cut-off areas with relief items.

She said as an emergency response, RA has deployed emergency contractors to provide temporary routes in all areas where roads were washed away.

“Currently we are in the procurement process of acquiring other contractors to grade the roads once we access funding from AfDB,” she said.

She pointed out that among the affected roads, the most important is the M1 Road in Chikwawa which remained cut for about one and a half days which negatively impacted on travel plans for lots of people and organizations.

Kanjanga said the wash-aways on the Makanjira road also affected many people as the road          remained cut for three days before completion of construction of an alternative route.

Besides repairing the roads damaged by floods, the Roads Authority has lined up a number of road projects including construction of the 25.9km Nsanje-Marka Road which is part of a regional route connecting Malawi with the Port of Beira in Mozambique and beyond.

RA also plans to reconstruct and widen the Kaphatenga – Dwangwa Road in Nkhotakota  District and the work will involve replacing single lane and temporary bridges with permanent two lane bridges for the section spanning from Nkhotakota – Bua Bridge.

The other project on the cards is the rehabilitation of the 45km Mzimba – Mzarangwe which is of the key roads in the Northern Region of Malawi.

RA will also reconstruct and upgrade the Chiringa-Muloza road in Mulanje and Rumphi-Nyika-Chitipa road in the northern region which is currently of earth standard and will be upgraded to bitumen Class 1.

Malawi’s public road network coverage by end June 2016 remained 15.451km out of which about 28% are paved and 72% is earth/gravel surface.

Road re-classification studies done in 2016 identified about 9,478km of undesignated road network that serve the rural communities.

Road handles more than 70% on internal freight and 99% of passenger traffic, and more than 90% of international freight and passenger traffic.

Studies indicate that in Malawi, 55% of the costs of production are taken up by transportation costs as compared to 17% of other developing countries.

The condition of paved road network as indicated in a study conducted in June 2014 is 38% good, 40% fair and 22% poor.

Electricity Generation Company of Malawi (Egenco) has described effects of deforestation as the major hindrance to uninterrupted generation of electricity in hydro-plants on the Shire River where Malawi generates 98% of its power.

Speaking at the Role of Trees, Forests and Resilience Symposium in Lilongwe, CEO for Egenco William          Liabunya said effects of deforestation including soil erosion, aquatic weeds and trash disrupt the work of turbines in the reservoirs at the power stations.

“The suspended silt particles lower the volume of the reservoirs and reach the turbines to choke power production operations. They also block the cooling water system machines for the generation units,” Liabunya said.

Liabunya also said climate change related problems such as floods are a big threat to power production saying this year floods that hit the lower Shire affected many generating power stations resulting in power outages for almost a week in the month of February.

He said such occurrences are a stumbling block to the Government in the implementation of the Energy Policy which aims to improve efficiency, reliability and affordability of energy supply systems for socio-economic growth.

Liabunya, therefore, urged the Forestry Department to scale up implementation of the National Forest Policy which aims to control deforestation and promote sustainable management of forests in order to enhance socio-economic development.

He explained that if both the Energy Policy and National Forestry Policy are seriously implemented and harmonized with other policies namely Agriculture and Food Security Policy; National Land Policy; Land Resources Management Policy; Water Policy; Climate Change Policy and National Environmental Policy; deforestation can be prevented which would help EGENCO in sustaining uninterrupted power production.

In its reforestation drive, in January this year EGENCO launched a trees planting exercise at Chibwana Village Traditional Authority Sitola in Machinga district.

By the end of this rainy season, EGENCO plans to plant 25-thousand trees along Shire River and tributaries.

Meanwhile, the Department of Energy Affairs says deforestation is a major concern in Malawi because the country lacks affordable and reliable alternatives to biomass, which is a major source of energy in the country catering for over 80% of the requirements.

Biomass energy is mainly used in water heating (cooking), tobacco curing, brick kilning, wastage in terms of charcoal residues, and in extreme cases of lighting.

In a presentation made at the Trees, Forests and Resilience Symposium in Lilongwe, Principal Energy Officer for the Department Cornwell Chisale observed   that almost all wood fuel and charcoal used for domestic requirements in Malawi is from natural forests which take long to regenerate and also due to frequent harvesting, regeneration is actually impossible.

Chisale, however, said the Department is promoting   alternative sources of energy including electricity (grid electricity and off-grid options including mini-grids), Gas (Liquid Petroleum Gas, natural gas and biogas), Bio-ethanol and Briquettes whose utilization will keep the country free from carbon emissions.

He explained that the drive to promote the alternative energy sources involves sound policy direction; lobbying for tax waivers for clean energy generation equipment, curriculum change to accommodate pro-clean energy subjects; introducing regulations that support clean energy use; and training communities, extension workers and institutions on alternative fuels.

He said the department is also conducting awareness campaigns on biomass utilization technologies through radio advertisements, cleaner cooking camps, open air functions, symposia and panel discussions.

The Department has, meanwhile, embarked on projects to promote alternative energy sources including         Malawi Rural Electrification Program (MAREP) which is extending the national electricity grid to rural areas, National Cook Stove Initiative to disseminate 2-million cook stoves by 2020; and increasing clean and affordable decentralized energy services to selected vulnerable areas of Malawi project which is to promote clean energy mini-grids as a means of electrifying rural areas.

Malawi is, currently, importing 3MW of power from Mozambique through Mandimba to Mangochi and 20MW from Zambia through Chipata and Mchinji.

The country is in discussions with Tanzania to import gas through Karonga to support the development of a 100MW Gas Fired Power Plant either to be operated by EGENCO or an IPP.