Review of ESCOM tarrifs under the automatic tariff adjustment formula (ATAF)

BACKGROUND

The Malawi Energy Regulatory Authority (MERA) considered a review of the ESCOM’s electricity tariffs under the Automatic Tariff Adjustment Formula (ATAF).

TRENDS IN INFLATION AND EXCHANGE RATES AND THE IMPACT ON ELECTRICITY TARIFFS

MERA noted that as at October 2018, the last time electricity tariffs were revised following the implementation of the third base tariff for the period 2018 to 2022, the exchange rate was at MK735.50/US$ while inflation was at 9.3%. Since then, the economic fundamentals have relatively remained stable, with the Kwacha depreciating marginally to MK743.68/US$, while inflation has slightly risen to 9.6% as noted in October 2019.

Applying the above levels of economic fundamentals to the automatic tariff adjustment formula (ATAF), results into a 1.54% potential upward tariff adjustment. On the basis of ATAF principles, the Board resolved to maintain tariffs at the current average of K88.02/kWh as the ATAF outcome is within the ±5% statutory trigger band.

SIGNED

Rt. Rev. Dr. J.P. Bvumbwe                       Dr. Collins Magalasi

BOARD CHAIRPERSON                            CHIEF EXECUTIVE OFFICER

5^th DECEMBER, 2019                               5^th DECEMBER, 2019