By Wahard Betha
In an effort to address the electricity access challenges, the Malawi’s Ministry of Energy has launched the Ngwee Ngwee Ngwee Fund with the target to add 5% national rural electricity access rate by 2024.
The US$20-million Fund is being bankrolled by the World Bank through the Malawi Electricity Access Project (MEAP) to enable eligible solar off-grid companies to import and distribute over 200,000 solar home systems to rural households across Malawi.
During the official launch in Lilongwe, Minister of Energy Ibrahim Matola said the project aims at increasing access to electricity through grid densification of Electricity Supply Corporation of Malawi (ESCOM) component, and Off-grid Market Development, which is Ministry of Energy component.
Matola said: “With this project’s component, Malawians, especially those living in rural and remote areas that are far from the national grid, will enjoy the benefits of electricity.”
“This project is, therefore, complimenting Government’s efforts to reach more people in rural areas with access to electricity where the Malawi Rural Electrification Programme (MAREP) which is now in Phase 9, is yet to reach.”
“This Ngwee Ngwee Ngwee Fund we are launching today is a complete package of interventions to unleash the potential off-grid solar market to cover 70% of electrified households in Malawi as aspired for in the National Energy Policy of 2018.”
“By assisting the off-grid solar companies, this Fund is fulfilling another aspiration in the National Energy Policy, to establish a vibrant, reliable, incentivized and sustainable private sector-driven Renewable Energy Technology industry.”
“Not only will this project benefit off-grid solar companies but, financial institutions will also benefit a lot from this initiative through the Technical Assistance Window which will provide training and capacity-building.”
The technical assistance includes: promotion and awareness building; quality assurance activities including the adoption and enforcement of Verasol quality assurance framework, efficient financial management and monitoring of collection efficiency; training of trainers, consumers and technicians to facilitate the efficient installation and maintenance of solar home systems.
Currently, the electrification rate is at 18% with 11.4% coming from the National grid and 6.6% from Off-grid solar solutions.
The fund will provide loans to eligible off-grid solar companies as working capital to expand their operations and speed up procurement and importation of the off-grid solar home systems.
He also said the project will also offer Result Based Grants to provide end-user with subsidies to close the affordability gap of rural customers that cannot afford solar home systems at the current commercial prices.
Matola also said the Fund will create a Market Catalyst Fund (MCF) of USD 500,000 to support small-scale off-grid market-based transformative solutions to scale-up the renewable energy transition, particularly by engaging the local off-grid solar companies in Malawi.
He said: “The idea is to make these local off-grid solar companies grow to the extent of being able to access capital on the market for the expansion of their businesses.”
“I, therefore, call upon the private sector companies to take advantage of this Fund and use it to expand their businesses in the off-grid solar market.”
“The terms of the loans have been made very competitive, as such, I do not expect any off-grid solar company to default on the loans they acquire from this Fund.”
“It is also my expectation that participating solar off-grid companies will operate within the principles of MEAP, the laws of Malawi and the World Bank’s operating framework.”
Matola further applauded World Bank for extending the loan and grant to the Government of Malawi, to implement the important project saying the Fund has come at an opportune time when the country needs massive investments in the energy sector to increase access to modern, clean, reliable and affordable energy.
He said the project will play a great role in fulfilling the Malawi Government goal of ensuring universal access to electricity by 2030, by providing the much needed financing to the Malawi off-grid solar market.
In his remarks, World Bank Country Manager for Malawi Hugh Ridelllauded solar off-grid power saying on-grid electricity is sometimes hard to reach rural, remote and the poor; and the fund will make Malawi to reach the United Nation’s Social Development Goal 7 (SDG7) which ensures access to affordable, reliable, sustainable and modern energy for all.
Ridellalso said the World Bank together with partners are working with Malawi Government in developing standards and policies in the next two years that will ensure the availability of a market where consumers are protected from low-quality products and benefit from lower prices driven by market competition.
“The World Bank acknowledges that expanding access to sustainable energy while protecting natural resources is essential to achieve climate and development goals. Expanding energy access is a catalyst to achieving sustainable and resilient economy with people firmly at the centre,” said Ridell.
Apart from the Ngwee Ngwee Ngwee Fund, World Bank is financing other energy projects including: The Mpatamanga Hydropower Project; technical assistance for ESCOM’s financial turnaround and; the Malawi-Mozambique Interconnector project.