Mining & Trade News

The Malawi Energy Regulatory Authority (MERA) says it is set to meet the needs and expectations of various stakeholders in Malawi through implementation of its third Strategic Plan and Customer Service Charter for the period of 2020 to 2024.

Speaking in Lilongwe during the launch of the strategic plan and customer services charter, Board Chairperson for MERA Joseph Bvumbwe said the strategic plan articulates the vision, mission, core values and an implementation matrix that will help the body to focus on the terms to deal with expectations during the four years.

“During the four years MERA will focus on the following priorities that have been termed as strategic pillars: positive contribution towards an energy secure nation; financial sustainability; efficient and effective service delivery; and public trust,” Bvumbwe said.

Stakeholder’s expectations include: timely processing of applications; strict enforcement of Performance and Safety Standards; continuous professional development of energy industry players; consistency in the enforcement of regulations; enhanced information communication and education of stakeholders especially regarding to MERA roles and functions; and improved efficiency in operations.

Bvumbwe said MERA desires that regulation of the industry should result into predictable and reliable energy supplies to ensure that the country has energy security in terms of supply, quality and distribution.

He stressed that during the planned four-year period, MERA will make more efforts to increase and diversify its revenue base to achieve the estimated budget of MK36.2 billion for the implementation of the plan.

He said: “We shall strive to be efficient for effective service delivery and we shall adopt best practices and provide services in accordance with governing statutes.

“We desire to enhance our transparency, open communication, and demonstrate high standard of ethics.”

The Board the board has identified potential risks and strategies to mitigate any setbacks to reaching the desired destination.

He said launch of the MERA service Charter and 2020-2024 Strategic Plan is an important landmark for MERA, in particular, and the energy sector generally. 

“The Board commits to work with the CEO, Management and staff to ensure that MERA works in such a way that is not only responsive to the needs of consumers and industry players but also facilitates the overall quality implementation of the Service Charter and Strategic Plan,” he said.

Bvumbwe pleaded for continued support and cooperation from the stakeholders stressing that that is the only way to make the plans have true meaning and bear results.

In his remarks, Minister of Natural Resources, Energy and Mining Binton Kutsaira, who was the Guest of Honour at the ceremony, said availability of adequate energy is a key catalyst to the country’s development and MERA is at the very heart of the solution to deal with energy crisis in the country.  

Kutsaira said the strategic plan has come at an opportune time when Malawi’s energy sector is undergoing transformation as the country races towards a middle income status that requires more energy to power up economy.

He said: “The 2020-2024 MERA strategic plan has set out a comprehensive roadmap for reform of the energy sector. Its objectives are to ensure that the sector becomes more performance oriented, more flexible and more responsible.”

Kutsaira urged management of MERA to continue engaging with all stakeholders as they implement the plan.

Energy is of the key priority areas (KPAs) outlined in the Malawi Growth and Development Strategy III.

Minister of Natural Resources, Energy and Mining Bintony Kutsaira has stressed the need for the Southern Africa Power Pool (SAPP) member states to develop more power generation projects to ensure that the region has adequate power to support economic development.

Kutsaira made the remarks when he officially launched this year’s 54th SAPP meetings in Lilongwe.

He said the generation of adequate power can spearhead development projects that help in boosting economies in the Southern Africa Development Community (SADC) member states where power shortfalls are rampant.

He said: “In order to keep pace with developments taking place in our countries, it is incumbent upon us, as countries, to invest in electricity supply infrastructure more-so to avoid power deficits in future.”

“The SADC region’s economies are continuing to grow in fulfilment of the SADC industrialisation thrust and hence the region needs more power.”

Kutsaira encouraged experts in the energy sector to continue applying their efforts to harness solutions that will keep the lights on, commerce ticking, industry running and agriculture flourishing even in these challenging environments.

He stressed that electricity remains one of the critical driving forces for economic development and that the experts are at the centre of making it work.

Kutsaira urged SAPP to put in place enough measures to attract independent power producers (IPPs) to invest in the region.

He said it is a welcome development that SAPP already started enticing IPPs through revising membership categories to allow IPPs to participate in electricity trading in SAPP.

“I, therefore, urge you, SAPP member states, to continue to cooperate with these new players so that together you pursue the goal of providing reliable, sustainable and affordable power to all our citizens in the SADC Region,” he said.

Kutsaira also said Malawi is looking forward to becoming a beneficiary of SAPP through the Mozambique-Malawi Power Interconnector Project which is on course.

ESCOM CEO Alexon Chiwaya said Malawi is ready for the interconnector having improved its transmission and distribution infrastructure using financing from the Millennium Challenge Corporation (MCC) of the US Government.

“Through the MCC Malawi Compact, we recorded an improvement in the system infrastructure including: construction of 200MVA 400/132kV Phombeya and Nkhoma Substations and; a 400kV transmission line from Phombeya to Nkhoma,” said Chiwaya.

The Phombeya Substation will be the landing point for the 400kV Mozambique-Malawi Interconnection whilst the Nkhoma Substation will be the landing point for the 400kV Zambia-Malawi Interconnection.

He also thanked the World Bank for the financial support rendered through the Energy Sector Support Project (ESSP) which greatly assisted in the reinforcement of the transmission and distribution networks.

SAPP has nine interconnected countries, with a commitment to connect the remaining three member countries, namely Angola, Tanzania and Malawi.  

The Electricity Supply Corporation of Malawi (ESCOM) will on March 3 to 5, 2020 host the 54th Southern Africa Power Pool (SAPP) meeting at Bingu International Convention Centre in Lilongwe.

A press statement released by ESCOM says that the meeting will attract local and foreign key stakeholders to deliberate on issues hindering power generation and supply in the southern part of Africa.

“This Meeting will draw together about 150 experts from 12 member states in the Southern Africa Development Community (SADC) to discuss issues affecting the electricity sector, such as planning, operations, power trading and environment,” reads the statement.   

The meeting comes at a time ESCOM is working on the construction of the Mozambique-Malawi Power Interconnector which will cement its place as an operating member of the power pool.

Escom considers membership of the power pool which will enable Malawi to share electricity with other SADC member states as an opportunity to ensure continuous supply of power amid numerous climate change related challenges that are disrupting supply forcing the utility to supply only 351 MW against a peak demand of 500 MW.

Malawi power supply challenges include flooding that results in siltation and low water levels which reduce capacity of electricity generation equipment.

Through the power pool, Malawi also hopes to start exporting electricity to the region in future as the Electricity Generation Company (EGENCO) is pursuing several projects to increase its power supply capacity.

The projects on the cards include expansion of Wvowe Mini Hydropower Scheme from 4.5 MW to 9MW; the 20MW solar power project at Nanjoka in Salima, the 180MW Songwe Hydropower Project on Songwe River; the 138MW Kholombidzo Hydroelectric Power Plant on Shire River, the 309MW Mpatamanga Hydro Power Plant and a Coal Fired Plant.

SAPP was created in August 1995 at the SADC summit in Kempton Park, South Africa, when member governments of SADC (excluding Mauritius) signed an Inter-Governmental Memorandum of Understanding (MoU) for the formation of an electricity power pool in the region under the name of the Southern African Power Pool.

The Ministers responsible for energy in the SADC region signed the Revised Inter-Governmental MoU in February 2006.

SAPP was organized under the visions of: facilitating the development of a competitive electricity market in the SADC region; giving the end user a choice of electricity supplier; ensuring that the southern African region is the region of choice for investment by energy intensive users and; guaranteeing sustainable energy developments through sound economic, environmental and social practices.

The body serves to provide a forum for the development of a world class, robust, safe, efficient, reliable and stable interconnected electrical system in the southern African region; coordinate and enforce common regional standards of quality of supply, measurement and monitoring of systems performance; facilitate the development of regional expertise through training programmes and research and; increase power accessibility in rural communities.

The SAPP is governed by four agreements: the Inter-Governmental Memorandum of Understanding which enabled the establishment of SAPP; the Inter-Utility Memorandum of Understanding, which established SAPP’s basic management and operating principles; the Agreement between Operating Members which established the specific rules of operation and pricing; and the Operating Guidelines, which provide standards and operating guidelines.

The SAPP has twelve member countries represented by their respective electric power utilities organized through SADC.

SAPP has four working committees: the Environmental Sub-Committee, the Markets Sub-Committee, the Operating Sub-Committee and the Planning Sub-Committee under a Management Committee which in turn reports to the Executive Committee.

Reserve Bank of Malawi’s (RBM) report released at the first 2020 meeting of the Monetary Policy Committee (MPC) shows that the sectors of energy and mining registered highest growth in the year 2019 due to continued expansion of private sector credit in the country.

The report indicates that the energy sector comprising electricity, gas and water registered 101.8% while mining and quarry registered 73.8% growth.

RBM Governor Dalitso Kabambe says the development was supported by reduction in the interest rates in the country.

Kabambe says: “Private sector credit grew by 21.3% in 2019 compared to 11.5% in 2018. This development was supported by reduction in interest rates. Apart from the traditional borrowers, notable expansions were observed in energy and mining sectors.”

He projects that oil prices in 2020 will remain broadly stable than the past year, with prospects of continued decrease in 2021.

Kabambe says the projection of Brent crude oil prices in 2020 is at average of US$58.0 per barrel compared to US$60.2 of 2019 expected to lower again to US$55.3 in 2021 despite mounting geopolitical tensions.

The report also unveils that real output in 2019 overwhelmingly increased with estimated growth of 5.0% from 4.0% in 2018 following the recovery in the agriculture sector.

“Real Gross Domestic Product (GDP) growth is projected between 5.0 and 6.0% in 2020 owing to further recovery in the agriculture sector as well as favourable macroeconomic conditions,” reads the report.

The report further says the food inflation remained in double digit throughout 2019 and averaged 14.3 percent compared to 9.8 percent in 2018 while non-food inflation remarkably decreased, averaging 5.4 percent in 2019 from an average of 9.0 percent in 2018.

It says the rise in food inflation was mainly driven by increase in maize prices while the decrease in non-food inflation is on account of relatively tight monetary conditions.

The other sectors that performed well in 2019 include: financial services at 40.7%, transport at 40.3%, agriculture and forestry at 29.2%, construction at 19.3%, trade 16.0% and restaurants and hotels at 7.0%.

However, the Kwacha exchange rate has been broadly stable during the past three years and was trading at an average of K738.8731 per US dollar as of December 2019.

The stability of the Kwacha is expected to continue in 2020 on the back of adequate foreign exchange reserves which stood at 4.1 months of imports at the end of December 2019.

During the meeting, (MPC) decided to maintain the Policy Rate at 13.5% and the Lombard Rate at 0.4 percentage points above the Policy Rate.

The Committee also maintained the Liquidity Reserve Requirement (LRR) on local currency deposits at 5%, and the LRR on foreign currency deposits at 3.75%.

The Committee observed that although rising maize prices are likely to continue pushing up headline inflation in the first quarter of 2020, the elevation is deemed temporary and does not pose significant risks to the medium-term inflation outlook.

The global economic growth for 2019 and 2020 have been marked down by 0.1 percentage points to 2.9% and 3.3% from the October 2019 projections of 3.0% and 3.4%, respectively.

The downward revision is on account of surprises to economic activity in some emerging market economies, notably India and social unrest in few other economies

The Reserve Bank of Malawi was established under an Act of Parliament in July 1964 (Chapter 44:02 Laws of Malawi) and started its operations in June, 1965 in Blantyre replacing a branch of the Federal Bank of Rhodesia and Nyasaland founded to serve as a central bank of the Federation of Rhodesia and Nyasaland. 

At inception, the Bank had total assets amounting to K15.96 million with foreign assets amounting to K15.2 million an equivalent of £8.8 million, representing 18.1% of the federal currency which was redeemed in Malawi. 

The governments of Malawi and Mozambique have initiated a resettlement process to pave way for the construction of the electricity interconnector which will enable Malawi import electricity from the region through the Southern Africa Power Pool (SAPP).

This comes after the two countries have secured funds from the Norwegian Trust Fund, the World Bank, German Development Bank (KFW) and the European Union to finance the project.

Electricity Supply Corporation of Malawi Limited (ESCOM) and Electricidade De Mozambique, E.P. (EDM)   explain in a statement that they are now in the process of recruiting Rap (Resettlement Action Plan)  implementation consultant for the 400 KV Interconnector Project.

The first phase of the interconnection process will involve construction of the transmission line from Matambo substation in Tete, Mozambique to the Phombeya substation in Balaka, Malawi. Later, there will be an extension and upgrade of the Matambo substation on the Mozambican side from 220 KV to 400 KV.

“The Rap (Resettlement Action Plan) Implementation Consultant’s assignment is to ensure timely, appropriate and comprehensive implementation of the RAP in compliance with applicable legislations of both countries,” reads the statement.

It is expected that the consultant will be involved in all matters pertaining to the implementation of the resettlement plan, which will include mitigation of the adverse effects of the project.

“The implementation [of the resettlement plan] shall be done in accordance with the RAP plan developed by another consultant as well as in accordance with Environmental and Social Impact Assessment (ESIA) and the Resettlement Policy Framework (RPF) prepared by another consultant,” Escom and EDF say.

“The RAP implementation consultant will closely work with EDM and ESCOM’s Project implementation Units and Environmental and Social specialists, and cooperate with the respective local authorities in each country responsible for land acquisition, resettlement and compensation.

The two electricity companies have since invited eligible consulting firms to indicate their interest in providing the services.

The Malawi Energy Regulatory Authority (MERA) has come up with tougher guidelines and conditional requirements for electrical installers.

The conditional requirements include: age; knowledge; adequacy of work; premises, instruments and tools and; permit renewal.

Board Chairperson for MERA Joseph Bvumbwe said during a stakeholders’ consultative workshop on newly developed guidelines for electrical installations inspectors in Lilongwe that the new conditions will act as a guide in the process of appointing electrical installations inspectors and how they will be conducting inspections.

He said the new tougher conditions will ensure that the installers are well prepared before booking for interviews to get legal certificates.

“The guidelines will provide the scope of work of the inspectors through the classification provided in Section 5 of the Electricity (amendment) By-laws of 2018 and also provide procedures for inspection of electrical installations,” Bvumbwe said.

He explained that the guidelines will cover all types of installations including existing and new installations, and modifications and replacement of electrical equipment.

MERA Senior Electricity Specialist Shaibu Mludi said MERA came up with the new conditions following a survey conducted in the country’s major cities, which discovered abnormalities in electrical installations.

He said though all targeted installers were above recommended age (18), about 50 percent were found lacking knowledge about installation, while the average of 73 percent had no protective equipment.

“Most installers do not have an operating workshop, and those installers with overwhelming jobs do stay in a cubicle without suitable tool boxes and instruments to conduct tests,” Mludi said.

He also revealed that some installers were found with forged permits, operating without registering, non- committal to renewal of permits and some selling the registration to non -registered installers.

Mludi said minimum passing rate for the installers during practical performance assessment during inspections is 75 percent and warned that the Authority will de-register installers performing below 75 percent.

“MERA will impose penalties on installers who forge or sell stamps to uncertified electrical installers and that it will also organize installers committee to sensitize members on the dangers of forging and selling stamps to non-licensed installers,” he said. Electrical Contractors Association of Malawi President Michael Gadama admitted the presence of the

The Malawi Government is seeking a strategic private sector sponsor to develop the proposed 350MW Mpatamanga Hydro Power Project on the Shire River.

The Mpatamanga project, which was identified in the 1998 Power Development Plan study, is being developed as a Public Private Partnership with the Malawi government through EGENCO acquiring 30% shareholding and a strategic sponsor expected to have 70% interest.

Speaking to Mining and Trade Review at the launching ceremony of the procurement process for the strategic sponsor in Blantyre, Acting CEO for Malawi’s Public Private Partnership Commission, Audrey Mwala, said the new power plant will be located at Mpatamanga Gorge, between the two existing hydropower plants, Tedzani and Kapichira, on the Shire River.

She said: “Government conducted a comprehensive Feasibility Study in 2018 which recommended a peaking plant with a capacity of 309MW, and the station will have two dams: Main dam for 309MW daily peaking plant, and a regulating dam downstream for additional 41MW of baseload generating.”

“The project intends to meet future power demand and to balance current and future baseload energy from solar, wind, thermal or run of river plants as it will provide crucial peaking capacity for Malawi.”

The Malawi Government is, meanwhile, looking for interested bidders who upon signing confidentiality undertaking and paying the required fee will be granted access to a Virtual Data Room containing all necessary documents for the project.  

She said the state will organize a pre-bid conference and will provide additional opportunities for bidders to submit queries and seek clarifications during the tender process.

The strategic sponsor will also be subsequently required to tender out certain key contracts in compliance with requirements set by the Malawi Government.

Minister of Natural Resources, Energy and Mining Bintony Kutsaira, who graced the launching ceremony for the procurement process, touted the project as one of various interventions that his Ministry is pursuing to develop the energy sector which is one of the priority areas in the Malawi Growth and Development Strategy (MGDS) III.

“The country is ranked poorly on access to electricity which is only available to 11% of the population, despite this low penetration of electricity, the country faces significant blackouts mainly arising from a low generation capacity. Implementation of this project means a halt to persistent power blackouts.”

Kutsaira expressed gratitude to the World Bank for financing the feasibility study of the project.

Minister of Natural Resources, Energy and Mining Bintony Kutsaira is set to launch the new National Energy Policy 2018 on Wednesday, November 27 at Bingu International Convention Centre (BICC) in Lilongwe.

Secretary for National Resources, Energy and Mining Patrick Matanda says in a press statement that the new policy, which is a culmination of a wide consultation process that took into account a variety of views from various stakeholders, is a revision of the 2003 national energy policy.

He explains that the new policy emphasizes on the importance of private sector participation in the energy sector and provides an environment conducive for such participation in the energy sector in the form of direct investment, public and private partnership.

Matanda says: “The policy also emphasizes on sustainable and clean energy which is accessible to all.”

“Energy efficiency is another priority area of this policy which also recognizes the importance of security of energy supply systems.”

“Mitigating environmental, social safety and health impacts of energy production and utilization is a key part of the policy.”

Government has reviewed the 2003 policy because in spite of its success, it had a number of shortfalls and challenges which needed to be rectified,

“The 2003 policy was driven by the vision 2020 and the Millennium Development Goals ( MDGs), and the  development agenda has since moved on and the MDGs have given way to Sustainable  Development Goals (SDGs) and  the main development agenda for Malawi now is Malawi  Growth and Development Strategy lll, both of which  have put energy as a high priority area”, he says.

The other factor that necessitated the revision of the 2003 policy is that in 2015 the government of Malawi (GoM) adopted a power marketing policy as well as an oil importation policy and both needed to be factored into the new energy policy.

“The United Nations Sustainable Energy for all initiative of 2011 also emphasizes on issues of access to energy for all agenda which again needed to be reflected in the new policy,” says Matanda.

The Malawi Government has adopted a public sector reform program that is aimed at ensuring efficiency, transparency and accountability in the delivery of public services of which energy is a part.

The goal of the new policy is “Access to affordable, reliable, sustainable, efficient and modern energy for all Malawians by 2030.”

It could be solar or coal. But water as a source of power must not be ignored. At least that is what might take for the African region to achieve energy efficiency, according to experts at a recent African Hydro Symposium which took place in Blantyre, the 29th of its kind in the region.

Scores of delegates from well over 14 countries gathered in the Warm Heart of Africa to share the future of power generation in the region.

The timing and the hosting nation could not be more convenient. Malawi has one of the lowest electrification rates in the region. Statistics indicate that only about 11% of the people in the country with a population of over 17-million are connected to the country’s main grid.

And the effects of the current climatic conditions on the generation of power in the region should not be ignored, according to the experts who took part in the three-day conference.

“In Southern Africa where rainfall patterns have changed, we need to call for innovation from partners on sustainable ways of generating power. We need turbines that use less water,” said William Liabunya, CEO for Electricity Generation Company of Malawi (Egenco).

Liabunya cited Malawi and Zimbabwe which are facing electricity challenges mostly due to decreased water levels in Lakes and rivers as the major victims of the effects of climate change on power generation.

But climate change is only one of the challenges affecting power generation in the region. Lack of adequate investment by private companies is another contributor to inadequate power generation.

Why companies?

EGENCO, the first parastatal to play the role of a power generator in the country has been in operation for just only two years. One of its maiden projects has been to increase the energy capacity of Nkula A. So far, the rehabilitation of the power plant has seen a boast of 10 megawatts. Other projects are in the offing.

During the conference, Secretary for Ministry of Natural Resources, Energy and Mining, Patrick Matanda highlighted EGENCO’s 15-year strategic plan aimed at improving power access in the country.

Matanda said there is need to increase power supply in the country as this will ultimately increase economic opportunities.

“Clinics will open, students will study well in the villages, businesses will be kept open and this will ultimately attract investors,” he said.

Liabunya said private companies need to join the bandwagon through investment in power generation as Independent Power Producers (IPPs) to supply the national grid, and supplement power generated by EGENCO in order for Malawi to overcome the energy deficit.

The conference attracted four European countries including United Kingdom, Croatia, German and Austria.

African countries represented included Namibia, Kenya, Democratic Republic of Congo, Mozambique, Cameroon and Kenya.

“When you look at our young history, it gives us pride to host this symposium,” said Liabunya, “Maybe out of the 14 countries in the region [present] we have the lowest reach and it is our responsibility to make the changes.”