Friday, July 12, 2013

Power Interconnection requires ESCOM overhaul

Finally, the power inter-connection deal has been put to paper. I only hope that our negotiators managed to get the best deal, not just the symbolism of normalising relations with our neighbours. We are buying something here. One of the reasons Malawi ranks poorly on the ease of doing business are the daily power cuts. I don’t think any sane and rational investor would put their money in a country that is incapable of meeting energy demands. In the same-light, the power interconnection is a major step towards revamping a path towards private sector growth and job creation. So we can pat government for such a bold step, but we need not forget that the biggest threat to the deal is ESCOM, the implementing agency. ESCOM requires a radical change in how it conducts its business. Such a change can only be made possible with matching political will seen in getting Maputo on the table to negotiate. While demand has risen over the years, ESCOM inefficiencies greatly contribute to the power sector. We still have issues in attracting investors or reducing the cost of doing business. I must say ESCOM requires a radical overhaul in how it does business. While energy demand has grown over the years, their service delivery is far below average and they may not cope with extra kilowatts from across the border, at least in the reasoning of a commoner. It may sound like a car that is perpetually on an empty tank, and suddenly a philanthropic unknown fills the tank to the brim. It can be disastrous as tales of lottery winners have proved many times. As a matter of fact, we need to be cautious in how we build our expectations., ESCOM inefficiencies are easy to see, and the lack of generation capacity is no excuse to justify all concerns consumers have. Just to pick up a few examples. The pre-paid meter system was introduced some years but has grown on a snail’s pace. The idea was good in the sense that it improves efficiencies in revenue collection. But on many occasions consumers have not been able to purchase their electricity at selling points simply because of a network breakdown. The entire Lilongwe city had at some point only three selling points including the Escom office in city centre and two petrol stations. And it was quite common to have two selling points down and a long line of people just to top up their accounts. A network outage is no excuse, and interestingly, it is never publicised in the media. Now consider the load shedding programme. Much as over the years demand for electricity has gone up, it is very strange if ESCOM cannot stick to its own schedules. Once load shedding schedules have been published in various media outlets, rarely have they been adhered too. I should think its engineers put a lot of thought, mathematically, to come up with load-shedding schedules. Could it be that someone simply makes a call and instructs switch engineers to power off certain areas? Not only is such a business practice inefficient, but unprofessional, and for heaven’s sake, it has gone unpunished, and possibly accepted as a norm. It all adds up to the image of a country as bad to do business with its high cost of interrupted utilities. Sometimes one wonders whether in ESCOM’s business practice, electricity is considered a privilege to consumers. The customer service remains quite awful for the high tariffs that consumers continue to pay. It can take someone a couple of years to have their property connected to the national grid. Lots of excuses are often given to induce desperate users to pay a bribe. Either meters are out of stock or the available meters cannot be installed in particular suburbs, as if electricity is a differentiable product like fruits. Faults can take days to be attended, yet ESCOM employees perennially love to claim a thirteenth cheque for plunging most homes and businesses in paid darkness. In the process, businesses cannot produce or plan their schedules with respect to energy needs. Now that government has signed the power inter-connection bill there are two aspects that we have to carefully look at. The inter-connection deal will increase the supply of electricity in the country. On the other hand, it is also important to recognise that some of the power cuts we have had over the years are purely a matter of ESCOM inefficiencies, a corporation that has had billions in loans guaranteed by the tax payer. We need some serious thinking and hard decisions. Maybe it is time we seriously considered breaking up ESCOM into two corporations or overhaul their entire business culture, which many deem awash with indifference in how it operates. Probably one can focus on generation and management of stations. Another corporation can simply be responsible for distribution and cater for all potential private businesses that are interested in power generation business. The fact we will import power from Mozambique means a lot. It means other players can produce electricity but they need not own a national grid. Other investors besides ESCOM can be brought on board to produce electricity in the country. MERA can have more reasons to exist other than try to regulate an old, archaic and ultra conservative corporation riddled with absolute inefficiencies. We need to take our energy reforms more seriously and steadily encourage investment in the industry.

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