Mining & Trade News

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 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.”

Construction works for the long awaited Mozambique – Malawi power interconnector are now ready to commence following the signing of the Implementation Agreement for a EUR 20-million grant that the European Union (EU) will provide for the project through German Development Bank (KfW).

Electricity Supply Corporation of Malawi (ESCOM) CEO Allexon Chiwaya penned the Agreement with officials of KfW.

“The signing of the agreement is an important milestone as it paves way for commencement of project implementation,” says Escom, EU, German Technical Cooperation (GIZ) and KFW in a joint statement.

Besides the EU support, the World Bank has earmarked US$ 15-million while the German Government through the KfW is contributing EUR 30-million to Mozambique’s power utility, EDM, for the construction works on the Mozambique side.

Through the 218 km long 400 kV transmission line, Malawi will start importing electricity from Mozambique and other Southern Africa Power Pool (SAPP) countries from 2023.

The statement reads: “The interconnector will see Malawi connecting to the SAPP for the first time since the nation became a member of SAPP in 1995 and expects the country to effectively upgrade its position from an observer to a fully operational member of SAPP.”

“The development will benefit the country as more clean energy will be supplied once the transmission line is functional.”

“The Increase and stabilization of power supply will significantly improve the access to clean energy for the private sector and consequently contribute towards sustainable economic growth.”

“Importantly, this clean energy will aid mitigation of climate change. As households will be supplied with adequate and reliable electricity each day, consumption of firewood and charcoal will be reduced.”

EU Ambassador to Malawi Sandra Paesen; German Ambassador to Malawi Juergen Borsch; and Senior Government of Malawi officials from both Ministry of Finance, Economic Planning and Development and; Ministry of Natural Resources, Energy and Mining witnessed the signing ceremony of the Agreement.

The Ambassadors bemoaned Government’s delays in the finalization of agreements with Independent Power Producers (IPPs) saying increased power availability and successful private investment in the energy sector attracts further investments in other sectors of the economy.

On the Malawi side, the interconnector will start at the 400 kV Phombeya substation in Balaka district and will traverse into Mozambique to connect to a new 400 kV Matambo substation in Tete province, in Mozambique.

The European Union (EU) Mission in Malawi has described the Mozambique-Malawi 400kV interconnector project as game-changer, saying it will link up Malawi’s energy grid to the regional electricity market of the Southern Africa Power Pool (SAPP) and facilitate trading as well as balancing of electricity among countries within the region.

EU Ambassador Sandra Paesan made the observation in a statement in which she hailed the ‘great things’ that happens when the EU and Malawi put their energy into joint projects.

Paesan said in partnership with KfW (the German Development Bank), the EU is supporting the Mozambique-Malawi 400kV interconnector project alongside other regional infrastructure initiatives aimed at boosting regional trade and economic growth.

Other initiatives that EU supports include the North-South M1 corridor in partnership with the European Investment Bank and the Nacala road corridor in partnership with African Development Bank.

She said currently lack of access to reliable power is preventing Malawi from realizing its full economic growth and development potential as businesses and people are affected by regular power cuts and high costs of power through diesel generators.

The ambassador noted that energy being one of the main drivers of inclusive and sustainable growth and jobs, Malawi needs reliable power supply if it were to achieve meaningful economic development.

In this vein, she explained that the interconnector project will provide Malawi’s business sector with more secure supply, which in turn will create an environment where business development can accelerate.
She also said having attained dependable power supply, there will be a multiply effect as growth in agricultural sector will benefit from new value chains that depend on a secure and affordable source of energy.

“A secure supply will further led to improved productivity as businesses will be in a position to operate uninterrupted while optimizing investments,” she said.

Paesan noted that Malawi’s energy infrastructure needs are quite substantial hence the need to attract private investment into the energy sector, particularly in renewable energy, to complement efforts from development partners.

She welcomed the initiative by the Malawi Government to procure 70MW of solar energy, saying it is in tandem with Africa-Europe Alliance and European External Investment Plan.

“Renewable Energy is the future and Malawi should fast-track the process of this initiative which started two years ago, so that the country realizes the benefits of such power investments,” she said.
The diplomat said European companies are ahead on the market when it comes to renewable energy investment and will be available to help Malawi in this respect.

“It is critical to continue our joint efforts to strengthen Malawi regional connectivity and infrastructure in view of supporting inclusive growth and development for all Malawians” said Paesen.
The EU recently organized a meeting with private firms in Blantyre, which discussed investment bottlenecks, including the prevailing energy woes.

attained dependable power supply, there will be a multiply effect as growth in agricultural sector will benefit from new value chains that depend on a secure and affordable source of energy.

“A secure supply will further led to improved productivity as businesses will be in a position to operate uninterrupted while optimizing investments,” she said.

Paesan noted that Malawi’s energy infrastructure needs are quite substantial hence the need to attract private investment into the energy sector, particularly in renewable energy, to complement efforts from development partners.

She welcomed the initiative by the Malawi Government to procure 70MW of solar energy, saying it is in tandem with Africa-Europe Alliance and European External Investment Plan.

“Renewable Energy is the future and Malawi should fast-track the process of this initiative which started two years ago, so that the country realizes the benefits of such power investments,” she said.
The diplomat said European companies are ahead on the market when it comes to renewable energy investment and will be available to help Malawi in this respect.

“It is critical to continue our joint efforts to strengthen Malawi regional connectivity and infrastructure in view of supporting inclusive growth and development for all Malawians” said Paesen.

The EU recently organized a meeting with private firms in Blantyre, which discussed investment bottlenecks, including the prevailing energy woes.

The Electricity Generation Company (EGENCO) will from September 8th to 10th host the 2019 African Hydro Symposium (AHS) at the newly built Sunbird Mount Soche Hotel’s SocheInternational Conference Centre in Blantyre.

The theme for this year’s symposium, which is the 29th, is “Quality Power for Sustainable Development in Africa.

Senior Public Relations Officer for EGENCO Moses Gwaza says in a Press Statement that EGENCO is currently inviting various organizations and individuals in the country to participate in the symposium which is a beneficial platform for sharing vital information with foreign hydro energy experts.

“The symposium which is held annually, is a regional forum where hydro power plant operating experts              representing various electricity utilities and Independent Power Producers (IPPs) in Africa, meet to share experiences and deliberate on developments, operations, maintenance and management of hydro power plants in the continent,” Gwaza explains.

He says the meeting will attract approximately 150 delegates from power utilities across Africa and some international stakeholders from various energy sectors, equipment manufacturers and suppliers from Europe, Asia and America.

Gwaza says the hosting of the great conference is a collaboration of both EGENCO and the Secretariat of the African Hydro Symposium based at Kafue Gorge Regional Training Centre in Zambia.

He urges organizations wishing to participate as joint sponsors and organizations in the power and related industries to register their individual employees as delegates to attend the symposium.

Meanwhile, various companies and organizations in the country have come up to provide financial assistance to the event.

The companies include the NICO Group which donated K4.5-million to the power utility for the event, which will explore strategies to develop the energy sector for economic growth.

EGENCO CEO William Liabunya thanked NICO for the support saying it manifests that the insurance company is a good corporate citizen who want to help EGENCO overcome the country’s power     generation woes.

The symposium will provide a room for sharing of viable ideas to move Africa’s electricity access from an average of 30 to 35%.

EGENCO was founded in 2017 as an electricity generation utility after the unbundling of the Electricity Supply Corporation of Malawi (Escom) into two entities with Escom responsible for power transmission and distribution.

The company, which recently launched its strategic plan, has planned a number of power generation projects including the construction of Mpatamanga hydro plant on Shire River.

EGENCO is seeking financing to execute the US$473-miillion project which will be supplying 309 MW to the national power grid.

German Consulting firm, Fichtner GmbH and CO KG, already conducted a feasibility study for the project with funding from the World Bank as part of the Energy Sector Support Project.

Besides Mpatamanga project, EGENCO is also sourcing funds for three other generation projects including the 138MW Kholombidzo Hydroelectric Power Plant which will be constructed on the Shire River upstream of Zalewa Bridge.

The US$511.5-million plant to be constructed over a period of 5.5 years will be uppermost in the cascade of the hydro-plants in the river.

Egenco is also planning to construct the 180MW Songwe Hydropower Plant on Songwe River through        cooperation between the Governments of Malawi and Tanzania.

The utility is also working on the expansion of Wvowe Mini Hydropower Scheme to add 4.5MW to the power grid.

EGENCO also plans to install a solar PV plant close to a load center at Nanjoka in Salima to maximize benefits to the national grid and satisfy the afternoon peak demand. The project scopes installation of a 20MW solar power plant to increase the generation capacity and introduce a diverse power mix in the generation system.

Trash interruption is the one of the contributing factors hindering power generation in the country so EGENCO is also conducting trash river diversion projects in many power stations on the Shire River.

In September 2017, the company commenced an 18 months project of dredging and diverting a tributary that was depositing a lot of slit at the Tedzani intake pond, a project that consumed about MK5-billion.

With funding from the US government energy compact through the Millennium Challenge Corporation, in January 2019 EGENCO acquired a brand new dredger for Kapichira power station to remove silt which covered over 70% of the generating dam.

Siltation lowers the water levels in the dams making it difficult to generate electricity matching the demand.

Currently the country has 406.6MW installed generation capacity but only 335.15MW is available to cater for 18.63 million people.

The utility’s hydro-power plants include Nkula A and B, Kapichira I and II, Tedzani I, II and III and Wovwe. 

EGENCO is also planning to construct a coal fired power plant as one way of diversifying the power sources.